UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

Annual Report Pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 29, 2013

Commission File Number:  1-31805

JOURNAL COMMUNICATIONS, INC.

(Exact name of Registrant as specified in its charter)

Wisconsin	20-0020198
(State of incorporation)	(I.R.S. Employer identification number)
333 West State Street, Milwaukee, Wisconsin	53203
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (414) 224-2000

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

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

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

Class B Common Stock, $0.01 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

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

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of 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) (Registrant is not yet required to provide financial disclosure in an Interactive Data File format).  Yes x No o

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

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

The aggregate market value of the class A common stock held by non-affiliates of the registrant as of June 28, 2013 was approximately $329,902,375 (based on the closing price of such stock on the New York Stock Exchange, Inc. as of such date).  The registrant’s class B common stock is not listed on a national securities exchange or traded in an organized over-the-counter market, but each share of the registrant’s class B common stock is convertible into one share of the registrant’s class A common stock.

Number of shares outstanding of each of the issuer’s classes of common stock as of February 28, 2014:

Class	Outstanding at February 28, 2014
Class A Common Stock	44,780,659
Class B Common Stock	6,032,077
Class C Common Stock	-

Documents Incorporated by Reference

Portions of the Proxy Statement for our May 6, 2014 Annual Meeting of Shareholders are incorporated by reference into Part III.

JOURNAL COMMUNICATIONS, INC.

INDEX TO FORM 10-K

		Page No.
Part I
Item 1.	Business	2
Item 1A.	Risk Factors	16
Item 1B.	Unresolved Staff Comments	26
Item 2.	Properties	27
Item 3.	Legal Proceedings	28
Item 4.	Mine Safety Disclosures	29
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of	29
Item 6.	Selected Financial Data	32
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 8.	Financial Statements and Supplementary Data	54
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	89
Item 9A.	Controls and Procedures	89
Item 9B.	Other Information	89
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	90
Item 11.	Executive Compensation	90
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	90
Item 13.	Certain Relationships and Related Transactions, and Director Independence	90
Item 14.	Principal Accounting Fees and Services	90
Part IV
Item 15.	Exhibits, Financial Statement Schedules	91
Signatures		93
Index to Exhibits		94

Forward-Looking Statements

We make certain statements in this Annual Report on Form 10-K (including the information that we incorporate by reference herein) that are “forward-looking statements” within the meaning of the 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 Annual Report on Form 10-K to identify forward-looking statements.  These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control.  These risks, uncertainties and other factors could cause actual results to differ materially from those expressed or implied by those forward-looking statements.  Among such risks, uncertainties and other factors that may impact us are the following, as well as those contained in Item 1A. “Risk Factors” of this Annual Report on Form 10-K:

· changes in network affiliation agreements, including increased costs;

· the availability of quality broadcast programming at competitive prices;

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

· changes in video programming distribution channels, including new Internet and mobile programming competitors;

· 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;

· 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);

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

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

· changes in newsprint prices and other costs of materials;

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

· 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.

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We caution you not to place undue reliance on these forward-looking statements, which we have made as of the date of this Annual Report on Form 10-K and which we undertake no duty to update.

PART I

ITEM 1. BUSINESS

Overview

Our business segments are based on the organizational structure used by management for making operating and investment decisions and for assessing performance.  Our reportable business segments are: (i) broadcasting; (ii) publishing; and (iii) corporate.  Our broadcasting segment consists of 13 television stations and 35 radio stations in 11 states.  Results from our digital media assets are included in our broadcasting and publishing segments.  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 publications – primarily in southeastern Wisconsin – as well as print facilities in West Milwaukee and Waupaca, Wisconsin.  Our corporate segment consists of unallocated corporate expenses and revenue eliminations.

We were founded in 1882 as a newspaper publisher serving Milwaukee, Wisconsin.  Our media business mix was expanded in 1927 when we signed on radio station WTMJ-AM, and again in 1947 when we put WTMJ-TV on the air.  In 1937, Harry J. Grant founded our employee ownership plan, which contributed significantly to our company’s positive culture and growth through its termination in 2003, in conjunction with our initial public offering.  We believe our current capital structure allows us to continue our longstanding tradition of employee ownership.  We have been able to attract and retain motivated people who have a passion for the business and a level of commitment and sense of accountability that is heightened due to our business culture and employees’ ability to participate in ownership.  Our culture is reinforced by our strong commitment to high ethical standards.

Our revenue was $397.3 million, $393.1 million, and $351.5 million in 2013, 2012, and 2011, respectively.  The revenue generated by our operating segments as a percentage of our consolidated revenue for the last three years is shown below:

	2013			2012			2011
Broadcasting		61.3	%		58.1	%		51.4	%
Publishing		38.9			42.0			48.7
Corporate		(0.2	)		(0.1	)		(0.1	)
Total		100.0	%		100.0	%		100.0	%

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

Broadcasting

Our broadcasting business is conducted through our wholly owned subsidiary, Journal Broadcast Corporation, and its subsidiaries, which together operate 13 television stations and 35 radio stations in 11 states.  Our broadcasting business accounted for 61.3% of our revenue for the year ended December 29, 2013.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 14, “Segment Reporting,” to our consolidated financial statements for additional financial information regarding our broadcasting business.

Our radio and television stations focus on providing targeted and relevant local programming that is responsive to the interests of the communities in which we compete.  We promote a local focus that allows our stations and radio clusters to serve listeners, viewers and advertisers effectively.  Our local focus strengthens each station’s brand identity and allows our stations to provide effective marketing solutions for advertisers by reaching their targeted audiences.

In an effort to maximize our operating margins, we have implemented a centralized management approach to certain functions such as IT, billing, finance, purchasing and human resources to generate economies of scale and incorporate best practices.  We intend to continue to pursue market share and invest in ratings growth which we believe will generate increased revenue and drive improvement in operating margin.  We also plan to continue to diligently manage our expenses and make prudent investments to drive revenue.

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In five of our markets, Milwaukee, Wisconsin; Boise, Idaho; Tucson, Arizona; Omaha, Nebraska and Green Bay, Wisconsin, we either operate both television and radio stations or operate more than one television station.  We believe multiple properties in a market help us to better serve advertisers, viewers and listeners and help maximize our revenue and operating margins.

Television Broadcasting

Based on the November 2013 Nielsen ratings book, we are ranked among the top three stations in terms of station audience rating in six of the ten markets in which our television stations operate.  In 2013, revenue from television operations accounted for 68.4% of our broadcasting revenue.

Our television stations are:

Station and Network Affiliation(8)	Market	Year Acquired	Station Market Rank(1)	Station Audience Share(1)	Total Stations in Market(2)	Expiration Date of Network Affiliation	Expiration Date of FCC License(3)
WTMJ-TV NBC	Milwaukee, WI	1947	4	8	16	12/31/2015	12/1/2005(4)
KTNV-TV ABC	LasVegas, NV	1979	3	6	15	12/31/2017	10/1/2014
WSYM-TV FOX	Lansing, MI	1984	4	6	7	12/31/2014	10/1/2013(4)
KIVI-TV ABC	Boise, ID	2001	3	8	12	12/31/2017	10/1/2014
KNIN-TV FOX	Boise, ID	2009	4	5	12	12/31/2014	10/1/2014
KSAW-LD ABC (6)	Twin Falls, ID	2001	3	4	7	12/31/2017	10/1/2014
WGBA-TV NBC	Green Bay/Appleton, WI (7)	2004	4	6	8	12/31/2015	12/1/2013(4)
WACY-TV MNT (5)	Green Bay/Appleton, WI (7)	2004	N/A	N/A	8	9/28/2014	12/1/2013(4)
KGUN-TV ABC	Tucson, AZ	2005	3	9	17	12/31/2017	10/1/2014
KWBA-TV CW (5)	Tucson, AZ	2008	N/A	N/A	17	8/31/2016	10/1/2014
WFTX-TV FOX	Naples/Fort Myers, FL	2005	4+	4	11	12/31/2014	2/1/2013(4)
KMTV-TV CBS	Omaha, NE	2005	3	10	11	9/18/2016	6/1/2014
WTVF-TV CBS	Nashville, TN	2012	1	14	10	7/2/2015	8/1/2013(4)

(1) Station market rank is based upon station audience ratings, which equal the percentage of the total potential household audience in the DMA.  Station audience share equals the percentages of the audience in the DMA actually watching our television station.  The percentages are based on surveys conducted 5:00 a.m. to 2:00 a.m., seven days a week, as published in the November 2013 Nielsen ratings book.  A “+” indicates a tie with another station in the market.

(2) Includes all television stations whose city of origin is within the DMA that meet the minimum reporting standards.

(3) Federal Communications Commission (FCC) (aka broadcast) licenses are granted for maximum terms of eight years and are subject to renewal upon application to the FCC.  Refer to “Regulation” for further discussion of the FCC license renewal process.

(4) Renewal pending.

(5) WACY-TV and KWBA-TV did not qualify to be reported in the November 2013 Nielsen ratings book.

(6) Low-power digital television station.

(7) Green Bay, WI and Appleton, WI are considered one DMA.  We also hold a license for a related low-power station, WTKI-CA, in this market.

(8) Effective January 1, 2014 we closed on the sale of Palm Springs television stations KMIR-TV and KPSE-LP MNT, which are recorded as discontinued operations.

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The affiliation by a station with one of the four major networks (NBC, ABC, CBS and FOX) has a significant impact on the composition of the station’s programming, revenue, expenses and operations.  Lower ratings of network programming can have an adverse affect on revenue.

We believe all of our television stations are strong affiliates with good relationships with the respective networks.  In all of our markets and regardless of network affiliation, we focus on delivering leading local news programming, locally produced programming and contracting for popular syndicated programming with the objective of maximizing our ratings and, in turn, our share of advertising spending in a given market.

Political and issue and automotive advertising are our most significant broadcasting revenue categories.  Television advertising revenue and rates in even-numbered years typically benefit from political and issue and Olympics advertising.  As the demand for advertising increases on the limited available inventory, we have the opportunity to increase the average unit rates we charge our customers.  Television political and issue advertising revenue was $1.3 million in 2013 compared to $34.0 million in 2012.  NBC has purchased the right to broadcast the Olympics through 2020, which will benefit our NBC affiliates in 2014.  Olympics-related advertising on our two NBC affiliates was $2.3 million in 2012.  Automotive advertising revenue increased by $11.6 million, or 31.2%, in 2013 compared to 2012.

We currently have retransmission consent agreements with Multichannel Video Programming Distributors (MVPDs) in our local markets for the rights to distribute our signals and local programming in their pay television services to consumers.  Our television stations experienced an $11.7 million, or 114.6%, increase in retransmission consent revenue in 2013 due to the acquisition of NewsChannel 5 Network, LLC, contractual annual rate increases and the renewal of several contracts.  These agreements are for multiple years with set rate increases and are based upon the number of subscribers to the MVPDs systems.

We have made substantial investments in digital transmission equipment at our stations and are fully compliant with FCC mandates on digital transmission.  We anticipate investing in digital infrastructure in several of our television markets as we make the continuing transition to HDTV (high-definition television).  Also, we expect these investments to create additional operating efficiencies and improve the transfer of program content to our Internet websites.

Radio Broadcasting

Based on the Fall 2013 Arbitron ratings book, we have the number one station in terms of station audience rank in two of the eight clusters in which our radio stations operate.  We have grown our radio operations primarily through acquisitions of stations in mid-sized markets with growth potential.  In 2013, revenue from radio operations accounted for 31.6% of our broadcasting revenue.

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Our radio stations are:

Market and Station	Year Acquired	Format	Station Audience Rank(1)	Total Stations in Market(2)	FCC License Class(3)	Expiration Date of FCC License(4)
Milwaukee, WI
WTMJ-AM (5)	1927	News/Talk/Sports	2	33	B	12/1/2012(6)
WLWK-FM (5)	1959	Adult Hits	11	33	B	12/1/2020
Omaha, NE
KEZO-FM (5)	1995	Rock	6	20	C0	6/1/2013(6)
KKCD-FM (5)	1995	Classic Rock	11+	20	C2	6/1/2021
KSRZ-FM (5)	1998	Adult Contemporary	7	20	C	6/1/2021
KXSP-AM	1999	Sports	14+	20	B	6/1/2021
KQCH-FM (5)	1999	Contemporary Hits	4	20	C	6/1/2021
Tucson, AZ
KFFN-AM	1996	Sports (Simulcast)	19+	23	C	10/1/2021
KMXZ-FM (5)	1996	Adult Contemporary	2	23	C	10/1/2021
KQTH-FM (5)	1996	News/Talk	10+	23	A	10/1/2013(6)
KTGV-FM	1998	Rhythmic AC	13	23	C2	10/1/2021
Knoxville, TN
WCYQ-FM (5)	1997	Country	7	23	A	8/1/2020
WWST-FM (5)	1997	Contemporary Hits	4	23	C1	8/1/2020
WKHT-FM (5)	1998	Contemporary Hits/Rhythmic	5	23	A	8/1/2020
WNOX-FM	2013	Classic Hits	8	23	C	8/1/2020
Boise, ID
KJOT-FM	1998	Variety Rock	14+	20	C	10/1/2021
KQXR-FM	1998	Active Rock	8	20	C1	10/1/2021
KTHI-FM	1998	Classic Hits	9	20	C	10/1/2021
KRVB-FM	2000	Adult Alternative	11+	20	C	10/1/2021
Wichita, KS
KFDI-FM (5)	1999	Country	1	22	C	6/1/2021
KICT-FM (5)	1999	Rock	5	22	C1	6/1/2021
KFXJ-FM (5)	1999	Classic Rock	11	22	C2	6/1/2021
KLIO-AM	1999	Spanish Sports	19+	22	B	6/1/2021
KYQQ-FM	1999	Regional Mexican	16	22	C0	6/1/2021
KFTI-FM	2000	Classic Country	12	22	C1	6/1/2021
Springfield, MO
KSGF-AM & FM	1999/2003	News/Talk (Simulcast)	7+	17	B/C3	2/1/2021
KTTS-FM	1999	Country	1	17	C	2/1/2021
KSPW-FM	1999	Contemporary Hits	2	17	C2	2/1/2021
KRVI-FM	2003	Adult Hits	5+	17	C3	2/1/2021
Tulsa, OK
KFAQ-AM (5)	1999	News/Talk	15	24	A	6/1/2021
KVOO-FM (5)	1999	Country	5+	24	C	6/1/2021
KXBL-FM (5)	1999	Classic Country	9	24	C1	6/1/2021
KHTT-FM	2012	Contemporary Hits	12+	24	C0	6/1/2013(6)
KBEZ-FM	2012	Classic Hits	3	24	C0	6/1/2021

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(1) Station audience rank equals the ranking of each station, in its market, according to the Fall 2013 Arbitron ratings book.  The diary ranking is determined based on the estimated share of persons 12 years and older and the Portable People Meter (PPM) ranking is based on the estimated share of persons six years and older listening during an average 15-minute increment (also known as "average quarterly hour," or "AQH," share) occurring Monday-Sunday between 6:00 a.m. and midnight. A "+" indicates a tie with another station in the market.

(2) Includes stations qualified to be reported in the Fall 2013 Arbitron ratings book.  To be reported in a diary market, a station must have met the following requirements among persons 12 years and older occurring Monday-Sunday between 6:00 a.m. and midnight:

a) Must be credited for at least one quarter-hour in at least 10 in-tab diaries, have a metro cume rating of 0.495 or greater and a metro AQH rating of 0.05 or greater.

To be reported in a PPM market, a station must have met the following requirements among persons six years and older occurring Monday-Sunday between 6:00 a.m. and midnight:

a) Must have received at least one quarter-hour of listening credit from at least one in-tab panelist and have a metro cume rating of 0.495 or greater.

(3) The FCC license class is a designation for the type of license based upon the radio broadcast service area according to radio broadcast rules compiled in the Code of Federal Regulations.

(4) FCC (aka broadcast) licenses are granted for maximum terms of eight years and are subject to renewal upon application to the FCC.  Refer to “Regulation” for further discussion of the FCC license renewal process.

(5) Stations that are broadcasting in digital.

(6) Renewal pending.

We employ a variety of sales-related and programming strategies.  Our sales-related strategies include maximizing our share of the advertising spending.  We believe development of local station clusters allows us to maximize market share because it allows us to offer a variety of format alternatives to appeal to a broader range of local advertisers.  Our programming strategy includes developing and retaining local on-air talent to drive ratings.  We have long-term contracts with many of our on-air personalities.  In addition, our Milwaukee radio station, WTMJ-AM, currently maintains exclusive radio broadcast rights for the Green Bay Packers, Milwaukee Brewers and Milwaukee Bucks, and operates a statewide network for their games.

Most of our radio broadcasting revenue is generated from the sale of local advertising, which includes non-traditional advertising programs.  Non-traditional advertising refers to initiatives which attract new local advertisers, including the creation of new local content and programs that combine television, radio or print with digital.  The balance of broadcasting revenue is generated from the sale of national advertising, political and issue advertising and other sources.  We have predetermined the number of commercials that are broadcast each hour, depending on the format of a particular station.  We attempt to determine the number of commercials broadcast hourly that can maximize available revenue dollars without diminishing listening levels.  Although the number of advertisements broadcast during a given time period may vary, the total number of advertisements broadcast on a particular station generally does not vary significantly from year to year, unless there has been a format change.

We have aligned our radio stations in clusters within a market, in many cases building out the cluster around a lead station.  We seek to build a unique and differentiated brand position at each station within a cluster so that we can offer distinct solutions for a variety of advertisers in any given market.  This clustering strategy has allowed us to target our stations’ formats and sales efforts to better serve advertisers and listeners as well as leverage operating expenses to maximize the performance of each station and the cluster.

Industry and Competition

We compete with other radio and television stations, newspapers, cable television, satellite television and radio, mobile, direct mail services, billboards and the Internet for advertising dollars.  In the future, we may also compete with newer digital platforms including wireless Internet technology in the automobile.  We believe some of the factors an advertiser considers when choosing an advertising medium include its overall marketing strategy and the ability to reach its targeted audience in the most cost-effective manner.  In both radio and television broadcasting, revenue is derived primarily from advertising.  Ratings, which estimate the number of listeners or viewers tuning in to a given station, highly influence competition in broadcasting because they affect the advertising rates the broadcaster can charge—higher ratings generally mean the broadcaster can charge higher rates for advertising.  By having a cluster of several stations within one market, we can offer advertisers the opportunity to purchase air time on more than one of our stations in order to reach a broader audience.

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Revenues in the broadcast industry are derived primarily from the sale of advertising time to local, national, political and issue advertisers, retransmission fees and, to a lesser extent, from barter, digital revenues and other sources.  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.  Other than the political and issue and automotive categories, 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, syndicated programs and other programming.

Changes in market demographics, the entry of competitive stations, the adoption of competitive formats by existing stations and the inability to retain popular on-air talent could result in lower ratings, which could in turn reduce advertising revenue.  Technology can play an important role in competition as the ratings each station receives also depend upon the strength of the station’s signal in each market and, therefore, the number of listeners who have access to the signal.  We continue to invest in the technology needed to maintain, and, where possible, strengthen our signals.

Commercial television stations generally fall into one of three categories.  The first category of stations includes those affiliated with one of the four major national networks (NBC, ABC, CBS and FOX).  The second category includes stations affiliated with more recently developed national networks, such CW and MyNetwork TV (MNT).  The third category includes independent stations that are not affiliated with any network and rely principally on local and syndicated programming.  Affiliation with a television network can have a significant influence on the revenue of a television station because the audience ratings generated by a network’s programming can affect the rates at which a station can sell advertising time.  Generally, each station determines rates and receives all of the revenue, net of agency commissions, for national and local spot advertising.  Our retransmission revenue has increased significantly in recent years and we expect that retransmission revenue will continue to increase with annual contractual rate increases in our existing contracts with MVPDs and strategic renegotiation of expiring contracts.  We renewed our network affiliation agreements with ABC, FOX, CW and MNT in 2011.  We renewed our network affiliation agreement with NBC in 2013.  The renewed network agreements include higher programming fees payable to the networks, which we expect will continue to increase.  There can be no assurance that we will achieve and/or maintain profitability on our retransmission agreements after accounting for payments to networks.

Seasonal revenue fluctuations are common in the broadcasting industry and are primarily due to fluctuations in advertising expenditures by retailers and automobile manufacturers.  Broadcast advertising is typically strongest in the second and fourth quarters of the year, which coincides with increased advertising around certain holidays.  Historically, the second quarter tends to show an increase in automotive advertising as well as increases in tourism and travel advertising before the summer months.  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.

Publishing

Our publishing business is conducted through our wholly owned subsidiaries, Journal Sentinel, Inc. and Journal Community Publishing Group, Inc., and consists of our daily newspaper, the Milwaukee Journal Sentinel, and our community publications.  Our publishing business accounted for 38.9% of our revenue for the year ended December 29, 2013.  Within our publishing segment, our daily newspaper accounted for 90.6% of our publishing revenue.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 14, “Segment Reporting,” to our consolidated financial statements for additional financial information regarding our publishing business.

Daily Newspaper

Published continuously since 1882, our daily newspaper has the largest circulation of any newspaper published in Wisconsin, with a six-month average net paid circulation reported to the Alliance for Audited Media in our Publisher’s Statement at September 30, 2013 of 318,711 on Sunday and 194,321 daily (on a five-day average).  The Milwaukee Journal Sentinel serves as the only major daily and Sunday newspaper for the Milwaukee metropolitan area.  According to a 2013 readership survey conducted by Scarborough Research, the daily and Sunday Milwaukee Journal Sentinel rank number one in readership among the 50 highest populated markets in the United States.  Over the course of a week, readership of our print newspaper and digital websites combined ranks first among the largest U.S. markets with a 59% penetration rate.  These rankings are calculated by dividing the number of adults reading an average issue of the newspaper in a newspaper’s Designated Market Area (DMA) by the number of persons over the age of 18 in the newspaper’s DMA. The Milwaukee Journal Sentinel’s DMA, which ranks among the top 50 in the United States, consists of the 10-county area surrounding Milwaukee, Wisconsin.

In 2011, our daily newspaper won its third Pulitzer Prize in four years for explanatory reporting. Only the New York Times and the Washington Post have won journalism’s highest honor more times in those four years than the Milwaukee Journal Sentinel.   In 2008 and 2010, the Milwaukee Journal Sentinel received Pulitzers in the Local Reporting category.

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In 2013, our newsroom staff received many awards for both print and digital coverage, from investigative work to features. Reporter Dan Egan was a finalist for the Pulitzer Prize in Explanatory Reporting for his coverage of invasive species in the Great Lakes, work that also won the AAAS/Kavli Science Journalism Award and a National Headliner Award for environmental reporting. Our watchdog coverage of the Milwaukee Police Department – from questionable crime numbers to a death in police custody – won the Eugene Pulliam First Amendment Award from the Society of Professional Journalists and was named Best of Show in the Headliner Awards. Separately, the investigation into the police custody death of an alleged felon won a George Polk award, while an investigation into suspicious crime numbers received the Clark Mollenhoff Award. Our “Paper Cuts” series, exploring the decline of Wisconsin’s paper industry and the rise of China as a paper power, won the APME International Perspectives Award, the top SABEW award for explanatory reporting and was recognized for digital storytelling by the Society for Features Journalism. Other recognition included a Casey Medal for a story about a child’s sexual identity issues and a career achievement award for medical reporter John Fauber. The newspaper’s business section was recognized for general excellence by the Society of American Business & Economics Writers (SABEW), our Tap Milwaukee website won an “Eppy” for best entertainment website and the “Wisconsin Voter” blog, written by Craig Gilbert, was named top news/political blog.

In addition to our traditional print media, we operate a number of websites that provide editorial and advertising content, including JSOnline.com, Milwaukeemoms.com and the MyCommunityNOW family of 26 community websites.  Our daily newspaper operates a co-branded online automotive offering under a franchise agreement with CarSoup of Minnesota, Inc. (CarSoup.com).  In 2013, online revenue of $12.8 million for digital products affiliated with our daily newspaper increased 3.7% compared to $12.3 million in 2012, primarily due to an increase in ads purchased through programmatic buying, real-time bidding and retail sponsorship ads.

The following table sets forth our average net paid circulation as filed with the Alliance for Audited Media (AAM):

	Six-Months Ended September 30						12-Months Ended March 31
	2013		2012		2011		2013		2012		2011
Daily (Five-day average; Monday-Friday)		194,321		207,066		188,818		202,573		187,287		188,992
Sunday		318,711		337,829		326,262		329,203		327,311		332,586

Circulation revenue accounted for 34.9% of our daily newspaper’s total revenue in 2013.  The Milwaukee Journal Sentinel single copy prices are $1.25 for daily, and $2.50 for Sunday, following a price increase for Sunday in June 2013 and for daily in July 2013, in our five county primary market area.  We believe our average net paid print circulation will decrease due to, among other factors, increased competition for readers from new media products, other free sources and time pressures on consumers.  Advertising revenue accounted for 52.5% of our daily newspaper’s total revenue in 2013.  Our daily newspaper experienced decreased revenue in most print advertising categories in 2013 compared to 2012 due to the secular influences affecting the newspaper industry and the continued economic uncertainty.  Digital advertising revenue and our Total Market Coverage (TMC) product showed growth in 2013 over 2012.

The Milwaukee Journal Sentinel introduced a digital subscription program, or “paywall,” on our jsonline.com website in January 2012.  Integrated into the launch of the paywall was a price increase to our home delivery subscribers, who gain full access to all digital products with their subscription fee.

Other revenue, which consists of commercial printing revenue, commercial distribution, and revenue from promotional events, accounted for 12.6% of our daily newspaper's total revenue in 2013.  Our state-of-the-art printing facility, which now includes the ability to print ultra-violet coated pages, similar to magazines, allows us to leverage our existing assets to sign long term agreements to print other daily newspapers, such as USA Today, Wall Street Journal, Kenosha News, Pioneer Press suburban editions, Chicago Reader and others.  We believe we provide high quality, competitive pricing and close proximity to their readers in southeastern Wisconsin and Chicago and its suburbs.

Community Publications

We own and operate community publications and a printing plant in Waupaca, Wisconsin through our subsidiary, Journal Community Publishing Group, Inc. In December 2012, we sold all but two of our community publications in northern Wisconsin.  The remaining publications are primarily in southeastern Wisconsin.

Lake Country Publications and its multi-media products captured a record 90 national and state awards, including the best-in-class trophy from the Wisconsin Newspaper Association for the largest weekly newspapers in 2013.

Our community publications have a combined paid and free average weekly distribution of approximately 175,000. Our community publications focus on local news and events that are of interest to the local residents.  In some markets, our community publications are the only source of local news.

We also publish a business-to-business publication that appeals to advertisers and readers in the agricultural market with a combined paid and free average monthly distribution of approximately 20,000.

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Advertising revenue and circulation revenue accounted for 55.1% and 8.9%, respectively, of our community publications’ total revenue in 2013. In addition to our publishing operations, we also provide commercial printing services, including cold-web printing, sheet-fed printing, electronic prepress, mailing services, bindery and inserting, mostly for other weekly and monthly publications. Other revenue, the majority of which comes from commercial printing, accounted for 36.0% of our community publications’ total revenue in 2013. Our community publications groups are as follows:

					Number of
	2013		2012										Niche
	Average		Average		Newspapers				Shoppers				Publication
	Distribution		Distribution		2013		2012		2013		2012		2013		2012
Northern Wisconsin		21,000		23,000		1		1		-		-		1		1
Southeastern Wisconsin		154,000		177,000		16		16		1		1		-		-

Newsprint

The basic raw material of newspapers is newsprint.  In 2013, we purchased the majority of our newsprint requirements through a purchasing agent, which has the option to purchase newsprint from multiple suppliers.  We may purchase additional newsprint in the spot market from other suppliers.

We believe we will continue to receive an adequate supply of newsprint for our needs.  Newsprint prices fluctuate based upon market factors, which include newsprint production capacity, currency exchange rates, manufacturer’s cost drivers, inventory levels, demand and consumption.  Price fluctuations for newsprint can have a significant effect on our results of operations.  The average net price per ton was $609 in 2013 compared to an average net price per ton of $629 in 2012, net of scrap sales.  Our consumption of newsprint decreased to 23,113 metric tons in 2013 (52 weeks) from 24,880 metric tons in 2012 (53 weeks), and our total cost of newsprint decreased $1.6 million in 2013 compared to 2012.  The decrease in consumption in 2013 at our publishing businesses was primarily due to decreases in average net paid circulation, run-of-press (ROP) advertising, and number of content pages. Based on the consumption of newsprint in 2013 by our daily newspaper and by our community publications, a $10 per ton increase or decrease in the price of newsprint would increase or decrease our total cost of newsprint by $0.2 million.

Industry and Competition

Newspaper publishing was the first segment of the consumer media industry.  Metropolitan and community publications often represent the primary medium for news and local advertising due to their historic importance to the communities they serve.

In recent years, newspaper industry fundamentals have declined as a result of the 2009 recession and secular industry change. Based on our results, we believe the rate of decline moderated in 2013.  Retail and classified ROP advertising have 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 housing market downturn, while now showing signs of recovery, has adversely impacted the newspaper industry, including real estate classified advertising as well as the home improvement, furniture and financial services advertising categories.

Advertising revenue is the largest component of a newspaper’s total revenue and it is affected by cyclical changes in national and regional economic conditions, as well as secular changes in the newspaper industry.  Classified advertising is generally the most sensitive to economic cycles and secular changes in the newspaper business because it is driven primarily by the demand for employment, real estate transactions and automotive sales, as well as the migration of advertising to the Internet and other advertising forms.  Classified revenue’s share has fallen to 19% of total publishing advertising revenues.  Newspaper advertising revenue is seasonal and our publishing business tends to see increased revenue due to increased advertising activity during certain holidays.  We do not expect that revenues at our daily newspaper or community publications will return to revenue levels reported in 2012 or prior years given the secular changes affecting the newspaper industry.

We believe newspapers and their online and niche products continue to be one of the most effective mediums for retail and classified advertising because they allow advertisers to promote the price and selection of goods more timely than most broadcast media, and to maximize household reach within a local retail trading area.  This is especially true in a market like Milwaukee, which is still home to a number of local-market decision makers who influence spending to reach shoppers in this community.  Notwithstanding the advertising advantages newspapers offer, newspapers have many competitors for advertising dollars and paid circulation.  These competitors include local, regional and national newspapers, shoppers, magazines, broadcast and cable television, radio, direct mail, Yellow Pages, the Internet, mobile devices and other media.  Competition for newspaper advertising revenue is based largely upon advertiser results, advertising rates, readership, demographics and circulation levels, while competition for circulation revenue is based largely upon the content of the newspaper, its price, editorial quality and customer service.  On occasion, our businesses compete with each other for regional and local advertising, particularly in the Milwaukee market.

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Compliance with Environmental Laws

As the owner, lessee or operator of various real properties and facilities, we are subject to various federal, state and local environmental laws and regulations.  Historically, compliance with these laws and regulations has not had a material adverse effect on our business.  Compliance with existing or new environmental laws and regulations may require us to make future expenditures.

Regulation

Our television and radio businesses are subject to regulation by governmental authorities in the United States.

Introduction

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

Licensed broadcast stations must pay FCC regulatory and application fees and comply with various rules promulgated under the Communications Act that regulate, among other things, political advertising, sponsorship identification, closed captioning of certain television programming, obscene, indecent and profane broadcasts, and technical operations, including limits on radio frequency radiation.  Additionally, the FCC’s rules require licensees to implement equal employment opportunity outreach programs and maintain records and make filings with the FCC evidencing such efforts.

The following is a brief summary of certain provisions of the Communications Act and specific FCC rules and policies.  The summaries are not intended to describe all present and proposed statutes and FCC rules and regulations that impact our television and radio operations.  Failure to observe the provisions of the Communications Act and the FCC’s rules and policies can result in the imposition of various sanctions, including monetary forfeitures, the grant of “short-term” (less than the maximum term) license renewals or, for particularly egregious violations, the denial of a license renewal application, the revocation of a license or the withholding of approval for acquisition of additional broadcast properties.

Broadcast Licenses/Renewals

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

On November 1, 2005, the Milwaukee Public Interest Media Coalition (“MPIMC”) filed a petition at the FCC asking it to deny the pending license renewal applications of all eleven commercial television stations in the Milwaukee Designated Market Area (DMA), including our station, WTMJ-TV, on the grounds that the stations failed to provide adequate coverage of state and local issues during the 2004 election campaign.  In June 2007, the FCC issued an Order denying MPIMC’s Petition.  In July 2007, MPIMC filed a Petition for Reconsideration with the FCC requesting it to reconsider the denial of MPIMC’s Petition to Deny.  We opposed MPIMC’s Petition for Reconsideration and in July 2008, the FCC issued a decision denying the Petition for Reconsideration.  In August 2008, MPIMC filed a second Petition for Reconsideration of the FCC’s June 2007 Order.  We filed an Opposition to MPIMC’s Second Petition in August 2008.  The FCC dismissed MPIMC’s Second Petition on January 12, 2009.  On February 16, 2010, MPIMC filed an Application for Review requesting the FCC to review the dismissal of MPIMC’s Second Petition.  We filed an Opposition to MPIMC’s Application for Review jointly with several other television stations in the Milwaukee DMA, and MPIMC filed a Reply.  By letter dated December 10, 2010, the FCC dismissed MPIMC’s Application for Review.  On January 10, 2011, MPIMC filed another Application for Review requesting the FCC to vacate its December 10, 2010 order and consider MPIMC’s February 10, 2010 Application for Review on its merits.  On January 25, 2011, we filed an Opposition to the second Application for Review jointly with several other Milwaukee television station licensees.  MPIMC filed a consolidated Reply to the Joint Opposition on February 2, 2011.  The matter remains pending.

On October 29, 2012, Media Action Center filed a Petition to Deny the renewal application of Station WTMJ(AM), Milwaukee, WI, alleging that the Station violated FCC rules because it did not provide sufficient time to supporters of certain candidates for state office.  On November 28, 2012, Journal filed an Opposition to the Petition.  Media Action Center filed a response to Journal’s Opposition on December 18, 2012.  The matter remains pending.

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Ownership Restrictions

The Communications Act and FCC rules and policies include a number of limitations regarding the number and reach of broadcast stations that any person or entity may own, directly or by attribution.  FCC approval is also required for transfers of control and assignments of station licenses.  A person or entity requesting FCC approval to acquire a radio or television station license must demonstrate that the acquisition complies with the FCC’s ownership rules or that a waiver of the rules is in the public interest.

The FCC is required to review quadrennially the following media ownership rules and to modify, repeal or retain any rules as it determines to be in the public interest: the newspaper broadcast cross-ownership rule; the local radio ownership rule; the radio-television cross-ownership rule; the dual network rule; and the local television ownership rule.  In 2008, the FCC released a Report and Order that modified only the newspaper broadcast cross-ownership rule to permit cross-ownership of one newspaper and one television or radio station in the top twenty markets under certain circumstances, and establishing a waiver procedure for such combinations in markets smaller than the top twenty.  The FCC stated that newspaper broadcast combinations that were grandfathered in 1975 when the newspaper-broadcast cross-ownership rule was adopted, including our Milwaukee operations, will continue to be grandfathered.  In a decision issued on July 7, 2011, the Court of Appeals for the Third Circuit vacated and remanded the modified newspaper broadcast cross-ownership rule.  A Notice of Proposed Rulemaking (“Ownership NPRM”) with respect to its 2010 quadrennial review of the media ownership rules that proposes to modify the newspaper broadcast cross-ownership rule to apply a positive presumption to requests to own a daily newspaper and a broadcast station in the 20 largest DMAs if certain conditions are met and to repeal the radio television cross-ownership rule is currently pending.  The FCC’s ownership rules that are currently in effect are briefly summarized below.

Newspaper-Broadcast Cross-Ownership Rule.  Under the currently effective newspaper-broadcast cross-ownership Rule, unless grandfathered or subject to waiver, no party can have an attributable interest in both a daily English-language newspaper and either a television station or a radio station in the same market if specified signal contours of the television station or the radio station encompass the entire community in which the newspaper is published.  Our media operations in Milwaukee are grandfathered under this rule.

Local Radio Ownership Rule.  The local radio ownership rule limits the number of radio stations an entity may own in a given market depending on the size of the radio market.  Specifically, in a radio market with 45 or more commercial and noncommercial radio stations, a party may own, operate, or control up to eight commercial radio stations, not more than five of which are in the same service (AM or FM).  In a radio market with between 30 and 44 radio stations, a party may own, operate, or control up to seven commercial radio stations, not more than four of which are in the same service.  In a radio market with between 15 and 29 radio stations, a party may own, operate, or control up to six commercial radio stations, not more than four of which are in the same service.  In a radio market with 14 or fewer radio stations, a party may own, operate, or control up to five commercial radio stations, not more than three of which are in the same service, except that a party may not own, operate, or control more than 50% of the stations in the market, except for combinations of one AM and one FM station, which are permitted in any size market.  For stations located in a market in which the Arbitron ratings service provides ratings, the definition of “radio market” is based on the radio market to which BIA Kelsey reports assign the affected radio stations.  For stations that are not in an Arbitron market, the market definition is based on technical service areas, pending further FCC rulemaking.  Also under the rule, a radio station that provides more than 15% of another in-market station’s weekly programming or sells more than 15% of another in-market station’s weekly advertising will be deemed to have an attributable interest in the brokered station.

Radio-Television Cross-Ownership Rule.  The radio-television cross-ownership rule generally allows common ownership of one or two television stations and up to six radio stations, or, in certain circumstances, one television station and seven radio stations, in any market where at least 20 independent voices would remain after the combination; two television stations and up to four radio stations in a market where at least 10 independent voices would remain after the combination; and one television and one radio station notwithstanding the number of independent voices in the market.  A “voice” generally includes independently owned, same-market commercial and noncommercial broadcast television and radio stations, newspapers of certain minimum circulation, and one cable system per market.

Local Television Ownership Rule.  Under the local television ownership rule, one party may own, operate, or control up to two television stations in a market, so long as the market would have at least eight independently owned full power television stations after the combination and at least one of the stations is not one of the top-four-rated stations (based on audience share) in the television market.  The rule also permits the ownership, operation or control of two television stations in a market as long as the stations’ Noise Limited Service contours do not overlap.  In 2011, the FCC sought comments on its proposal to eliminate the contour overlap exception that permits common ownership of two television stations in the same market.  The matter remains pending.  The FCC may waive this rule to permit ownership, operation or control of two television stations in a market that will not otherwise be permissible if one of the stations is in involuntary bankruptcy, is a “failed” station, or is “failing” (i.e., stations with negative cash flow and less than a four share all day audience rating).  Under the rule, the licensee of a television station that provides more than 15% of another in-market station’s weekly programming will be deemed to have an attributable interest in the other station.

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Dual Network Rule.  The dual network rule prohibits any of the four major networks — ABC, CBS, Fox and NBC — from merging with each other.

Television National Audience Reach Limitation. A person or entity is prohibited from having an attributable interest in television stations whose aggregate audience reach exceeds 39% of the television households in the United States.  The FCC is precluded by statute from modifying this rule in connection with its mandated quadrennial review of the ownership rules.  In calculating the number of households a station reaches, the FCC attributes a UHF station with only 50% of the television households in the market.  In 2013, the FCC released a rulemaking proceeding proposing to eliminate the UHF discount which remains pending.

Attribution of Ownership.  An “attributable” interest for purposes of the FCC’s broadcast ownership rules generally includes: (i) equity and debt interests which combined exceed 33% of a licensee’s total assets, if the interest holder supplies more that 15% of the licensee’s total weekly programming, or has an attributable same-market media interest, whether television, radio, cable or newspaper; (ii) a 5% or greater direct or indirect voting stock interest, including certain interests held in trust, unless the holder is a qualified passive investor in which case the threshold is a 20% or greater voting stock interest; (iii) any equity interest in a limited liability company or a partnership, including a limited partnership, unless properly “insulated” from management activities; and (iv) any position as an officer or director of a licensee or of its direct or indirect parent.

Alien Ownership

The Communications Act restricts the ability of foreign entities or individuals to own or hold interests in U.S. broadcast licenses.  Foreign governments, representatives of foreign governments, non-U.S. citizens, representatives of non-U.S. citizens, and corporations or partnerships organized under the laws of a foreign country (collectively, “aliens”) are prohibited from holding broadcast licenses.  Aliens may directly or indirectly own or vote, in the aggregate, up to 20% of the capital stock of a licensee.  In addition, a broadcast license may not be granted to or held by any corporation that is controlled, directly or indirectly, by any other corporation more than 25% of whose capital stock is owned or voted by aliens if the FCC finds that the public interest will be served by the refusal or revocation of such license.  The FCC has interpreted this provision to require an affirmative finding that foreign ownership in excess of 25% would serve the public interest and, in the past, the FCC has made such an affirmative finding in the broadcast context only in highly limited circumstances.  In 2013, however, the FCC issued a declaratory ruling that notwithstanding its past practices it will consider on a case-by-case basis requests for approval of acquisitions by aliens of in excess of 25% of the stock of the parent of a broadcast licensee.  In acting upon such a request, the FCC will coordinate with Executive Branch agencies on national security, law enforcement, foreign policy, and trade policy issues.

Repurposing of Broadcast Spectrum for Other Uses

In February 2012, Congress passed and the President signed legislation that, among other things, grants the FCC authority to conduct incentive auctions to recapture certain spectrum currently used by television broadcasters and repurpose it for other uses.  On October 2, 2012, the FCC released a Notice of Proposed Rulemaking to begin to develop the rules and procedures to implement incentive auctions authorized by Congress.  That rulemaking process remains ongoing.

The incentive auction process would have three components.  First, the FCC would conduct a reverse auction by which each television broadcaster may choose to retain its rights to a 6 MHz channel of spectrum or volunteer, in return for payment, to relinquish all of the station’s spectrum by surrendering its license; relinquish the right to some of its spectrum and thereafter share spectrum with another station; or modify its UHF channel license to a VHF channel license.  Second, in order to accommodate the spectrum reallocated to new users, the FCC will “repack” the remaining television broadcast spectrum, which may require certain television stations that did not participate in the reverse auction to modify their transmission facilities, including requiring such stations to operate on different channels.  The FCC has solicited comments on various aspects of the repacking and reimbursement process.  The FCC is authorized to reimburse stations for reasonable relocation costs up to a total across all stations of $1.75 billion.  In addition, Congress directed the FCC, when repacking television broadcast spectrum, to make reasonable efforts to preserve a station’s coverage area and population served.  Also, the FCC is prohibited from requiring a station to move involuntarily from the UHF band to the VHF band or from the high VHF band to the low VHF band.  The statute does not protect low power stations in the repacking process.  Third, the FCC would conduct a forward auction of the relinquished spectrum to new users.  The FCC must complete the reverse auction and the forward auction by September 30, 2022, and has announced that as of now it intends to conduct the auction during 2015.

The outcome of the incentive auction and repacking of broadcast television spectrum, or the impact of such items on our business, cannot be predicted.

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Obscenity, Indecency and Profanity

The FCC's rules prohibit the broadcast of obscene material at any time and indecent or profane material between the hours of 6:00 a.m. and 10:00 p.m.  In recent years, the FCC has intensified its enforcement activities with respect to programming it considers indecent and has issued numerous fines to licensees found to have violated the indecency rules.

In July 2007, the FCC implemented increased forfeiture amounts for indecency violations that were enacted by Congress. The maximum permitted fine for an indecency violation is $325,000 per incident and $3,000,000 for any continuing violation arising from a single act or failure to act.

Because the FCC may investigate indecency complaints on an ex parte basis, a licensee may not have knowledge of an indecency complaint unless and until the complaint results in the issuance of a formal FCC letter of inquiry or notice of apparent liability for forfeiture.  From time to time, our television and radio stations receive letters of inquiry and notices of proposed forfeitures from the FCC alleging that they have broadcast indecent material.  We do not believe that broadcasts identified in any currently pending complaints of which we are aware violate the indecency standards.  In July 2010, the U.S. Court of Appeals for the Second Circuit issued a decision finding that the FCC’s indecency standard was too vague for broadcasters to interpret and therefore inconsistent with the First Amendment.  In June 2012, the Supreme Court issued a decision which held that the FCC could not fine ABC and FOX for the specific broadcasts at issue in the case because the FCC had not provided them with sufficient notice of its intent to issue fines for the use of fleeting expletives.  However, the Court did not make any substantive ruling regarding the FCC’s indecency standards.  In April 2013, the FCC requested comments on its indecency policy, including whether it should ban the use of fleeting expletives or whether it should only impose fines for broadcasts that involve repeated and deliberate use of expletives.  The FCC has not issued any decisions regarding indecency enforcement since the Supreme Court’s decision was issued although it has advised that it will continue to pursue enforcement actions in egregious cases while it conducts its review of its indecency policies generally.

Sponsorship Identification

Both the Communications Act and the FCC’s rules generally require that, when payment or other consideration has been received or promised to a broadcast licensee for the airing of program material, the station must disclose that fact and identify who paid or promised to provide the consideration at the time of broadcast.  In response to a complaint by a public interest organization, the FCC issued letters of inquiry to several dozen television stations seeking to determine whether their broadcast of “video news releases” (VNRs) violated the sponsorship identification rules by failing to disclose the source and sponsorship of the VNR materials.  VNRs are news stories and feature materials produced by government agencies and commercial entities, among others, for use by broadcasters.  Two of our television stations received and have responded to the VNR letter of inquiry.  We cannot predict the outcome of the FCC’s investigation; however in 2007, the FCC issued a forfeiture notice to one cable company for alleged violations of the sponsorship identification rules based on the use of VNRs.

Digital Television

As of June 12, 2009, all full-power broadcast television stations were required to cease broadcasting analog programming and convert to all digital broadcasts.  Digital broadcasting permits stations to offer digital channels for a wide variety of services such as high definition video programming, multiple channels of standard definition video programming, audio, data, and other types of communications.  Each station is required to provide at least one free over-the-air video program signal.

To the extent a station has “excess” digital capacity (i.e., digital capacity not used to transmit free, over-the-air video programming), it may elect to use that capacity in any manner consistent with FCC technical requirements, including for additional free program streams, data transmission, digital or subscription video services, or paging and information services.  If a station uses its digital capacity to provide any services on a subscription or otherwise “feeable” basis, it must pay the FCC an annual fee equal to 5% of the gross revenues realized from such services.

Relationship with MVPDs

A number of provisions of the Communications Act and FCC rules govern aspects of the relationship between broadcast television stations and distributors of multiple channels of video programming such as cable, satellite and telecommunications companies (referred to as MVPDs).  The rules generally provide certain protections for broadcast stations, for which MVPDs are an important means of distribution and a provider of competing program channels.

To ensure that every local television station can be received in its local market without requiring a cable subscriber to switch between cable and off-air signals, the FCC allows every full-power television broadcast station to require that all local cable systems transmit that station’s primary digital channel to their subscribers within the station’s market (the so-called “must-carry” rule).  Alternatively, a station may elect to forego its must-carry rights and seek a negotiated agreement to establish the terms of its carriage by a local cable system—referred to as “retransmission consent.”  A station electing retransmission consent assumes the risk that it will not be able to strike a deal with the MVPD and will not be carried.  A station has the opportunity to elect must-carry or retransmission consent every three years.  Elections were made in October 2011 for the 2012-2014 three year period.  We have elected retransmission consent rather than must carry with MVPDs for most of our television stations.  A station that fails to notify a cable system of its election is presumed to have elected must-carry.

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Cable systems are not required to carry any programming streams other than a station’s primary video programming channel. Consequently, the multicast programming streams provided by several of our television stations are not entitled to mandatory carriage pursuant to the digital must-carry rules.  However, because the FCC’s action does not affect digital retransmission consent agreements, we are free to negotiate with cable operators for the carriage of additional programming streams under mutually agreed terms and conditions.  A similar must-carry and retransmission consent regime governs carriage of local broadcast channels by direct-to-home satellite television operators.  A satellite provider is not required to transmit the signal of any television station to its subscribers in that station’s market.  However, if a satellite provider chooses to provide one local station to its subscribers in a market, the provider also must transmit locally every other station in that market that elects must-carry status.  As with cable, stations may opt to pursue retransmission consent agreements.  A local television station that fails to make any election to a satellite provider is deemed to have elected retransmission consent and is not guaranteed carriage.  Satellite must-carry election periods occur every three years, consistent with cable must-carry periods.  We have elected retransmission consent with satellite television operators for all of our stations.

In February 2011, the FCC issued a Notice of Proposed Rulemaking (“NPRM”) reviewing the retransmission consent rules.  The NPRM requests comment on proposals to strengthen the good faith negotiation requirements and to require advance notice of the potential that a television station could be dropped from an MVPD’s programming lineup.  In a separate proceeding, the FCC has requested comment on whether the definition of MVPD should be expanded to include entities that make available multiple channels of video programming to subscribers through Internet connections.  Both proceedings are pending, and we cannot predict what impact, if any, they will have on our negotiations with video programming distributors.

Children’s Television Programming

Federal legislation and FCC rules limit the amount and content of commercial matter that may be shown on television stations during programming designed for children 12 years and younger, and require stations to broadcast three hours per week of educational and informational programming (“E/I programming”) designed for children 16 years of age and younger.  FCC rules also require television stations to broadcast E/I programming on each additional digital multicast program stream transmitted, with the requirement increasing in proportion to the additional hours of free programming offered on multicast channels.  These rules also limit the display during children’s programming of Internet addresses of websites that contain or link to commercial material or that use program characters to sell products.

Digital Radio

The FCC permits existing AM and FM radio broadcast stations to broadcast digitally in order both to improve sound quality and to provide spectrum for multicast channels and/or enhanced data services to complement the existing programming service.  The FCC has authorized AM and FM radio stations to broadcast digital signals using excess spectrum within the same allotted bandwidth used for analog transmissions.  In January 2010, the FCC adopted procedures that allow FM radio stations to significantly increase their digital power levels above those originally permitted in order to improve the digital service these stations provide.

Closed Captioning

FCC rules require the majority of programming broadcast by television stations to contain closed captions.  The FCC forwards to television stations viewer complaints it receives with respect to closed captioning problems, and several of our stations have received complaints that were filed with the FCC.  We have responded to these complaints, and they are currently pending.  In January 2012, the FCC adopted rules to require that television programming broadcast or transmitted with captioning include captioning of programming subsequently made available online, for example, by streaming content on broadcasters’ websites.  In 2013, the FCC released a rulemaking seeking comments regarding whether the Internet video captioning obligations should apply to brief segments or clips of video programs that are carried on the Internet.

FCC rules also require, in part, that affiliates of the top-four national broadcast networks in the top 25 markets provide a minimum of 50 hours of video-described primetime and/or children’s programming each calendar quarter.  The requirement to provide video descriptions will ultimately be expanded in 2015 to network affiliates in the top 60 markets.

Commercial Advertisement Loudness Mitigation

New rules enacted by the FCC that require our television broadcast stations to transmit commercials and adjacent programming at the same volume went into effect in December 2012.

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Recordkeeping

The FCC rules require broadcast stations to maintain various records regarding operations, including equipment performance records and a log of a station’s operating parameters.  Broadcast stations must also maintain a public inspection file.  Portions of the public inspection files maintained by television stations are hosted on an FCC-maintained website.

Regulation of the Internet

Internet services including websites of our newspaper and broadcast stations are subject to regulation relating to the privacy and security of personally identifiable user information and acquisition of personal information from children under 13, including the federal Child Online Privacy Protection Act (COPPA) and the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM).  In addition, a majority of states have enacted laws that impose data security and security breach obligations.  Additional federal, state, territorial laws and regulations may be adopted with respect to the Internet or other online services, covering such issues as user privacy, child safety, data security, advertising, pricing, content, copyrights and trademarks, access by persons with disabilities, distribution, taxation and characteristics and quality of products and services.

Employees

As of December 29, 2013, we and our subsidiaries had approximately 1,800 full-time and 900 part-time employees compared to approximately 1,800 full-time and 700 part-time employees at December 30, 2012.  Currently, there are 11 bargaining units representing approximately 600 (or approximately 22%) of our total number of employees.  We have entered into various collective bargaining agreements with these bargaining units.  Six of these agreements will expire within the next two years.

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ITEM 1A. RISK FACTORS

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

Risks Relating to Our Diversified Media Business

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

Approximately 76% of our revenue in 2013 was generated from the sale of local, regional and national advertising for broadcast on our radio and television stations and appearing in our newspapers and shoppers.  Advertisers generally reduce their advertising spending during economic downturns and some advertisers may go out of business or declare bankruptcy.  The merger or consolidation of advertisers, such as in the banking and airline industries, also generally leads to a reduced amount of collective advertising spending.  A recession or economic downturn, as well as a consolidation of advertisers, has had, and in the future could continue to have, an adverse effect on our financial condition and results of operations. In addition, our advertising revenue tends to decline in times of national or local crisis because our radio and television stations broadcast more news coverage and sell less advertising time.  Terrorist attacks or other wars involving the United States or any other local or national crisis could adversely affect our financial condition and results of operations.

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

In addition, our advertising revenue and circulation revenue depend upon a variety of other factors specific to the communities that we serve.  Changes in those factors could negatively affect those revenues.  These factors include, among others, the size and demographic characteristics of the local population, the concentration of retail stores and local economic conditions in general.  If the population demographics, prevailing retail environment or local economic conditions of a community served by us were to change adversely, revenue could decline and our financial condition and results of operations could be adversely affected.  This risk is especially evident with respect to the metropolitan Milwaukee market, which is served by our daily newspaper, the Milwaukee Journal Sentinel, one of our television stations, two of our radio stations, a number of our community publications and several websites, and, collectively, from which we derived approximately 48% of our revenue in 2013.

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

Our diversified media businesses operate in highly competitive markets.  Our radio stations, television stations, newspapers, shoppers and Internet sites compete for audiences and advertising revenue with other radio stations, television stations, newspapers, shoppers and Internet sites as well as with other media such as cable television, satellite television, satellite radio, magazines, outdoor advertising, direct mail and the evolving mobile and digital advertising space. Some of our current and potential competitors have greater financial, marketing, programming and broadcasting resources than we do or, even if smaller in size or in terms of financial resources, the ability to create digital niche products and communities and may respond faster or more aggressively to changing competitive dynamics.  This competition has intensified as a result of digital media technologies.  While the amount of advertising on our digital products has continued to increase, we have experienced, and in the future may continue to experience, a decrease in advertising revenues.

Our radio and television broadcasting businesses compete for audiences and advertising revenue primarily on the basis of programming content and advertising rates.  Our ability to maintain market share and competitive advertising rates depends in part on audience acceptance of our network, syndicated and local programming.  Changes in market demographics, the entry of competitive stations to our markets, the introduction of competitive local news or other programming by cable, satellite or other news providers, or the adoption of competitive formats by existing radio stations could result in lower ratings and have a material adverse effect on our financial condition and results of operations.  Changes in ratings technology, or methodology or metrics used by advertisers or other changes in advertisers’ media buying strategies also could have a material adverse effect on our financial condition and results of operations.  The ability of our broadcast digital products to attract significant future advertising revenue is unproven and we may incur increasing costs competing for digital advertising revenue.

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Further, our operations may be adversely affected by consolidation in the broadcast industry, especially if competing stations in our markets are acquired by competitors who have a greater national scope, can offer a greater variety of national and syndicated programming for listeners and viewers or offer enhanced opportunities for advertisers to reach broader markets.  In 2008, the FCC issued a Report and Order that modified the newspaper broadcast cross-ownership rule to permit cross-ownership of one newspaper and one television or radio station in the top twenty markets under certain circumstances.  In July 2011, the Court of Appeals for the Third Circuit vacated and remanded the modified newspaper broadcast cross-ownership rule.  In December 2011, the FCC issued a Notice of Proposed Rulemaking with respect to its 2010 quadrennial review of the media ownership rules.  The NPRM proposes to modify the newspaper broadcast cross-ownership rule in a similar manner to the modifications adopted in 2008 and to eliminate the television radio cross-ownership rule.  We cannot predict the outcome of any further administrative or judicial proceedings related to the media ownership rules.

In newspapers and shoppers, our revenue primarily consists of advertising and paid circulation.  Competition for advertising expenditures and paid circulation comes from local, regional and national newspapers, shoppers, magazines, broadcast and cable television, radio, direct mail, Yellow Pages, digital Internet and mobile products and other media.  Competition for newspaper advertising revenue is based largely upon advertiser results, advertising rates, readership, demographics and circulation levels, while competition for circulation revenue is based largely upon the content of the newspaper, its price, editorial quality and customer service.  On occasion, our businesses compete with each other for regional and local advertising, particularly in the Milwaukee market.  Our local and regional competitors in community publications are typically unique to each market, but we have many competitors for advertising revenue that are larger and have greater financial and distribution resources than us.  Circulation revenue and our ability to achieve price increases for our print products are affected by competition from other publications and other forms of media available in our various markets, declining consumer spending on discretionary items like newspapers, decreasing amounts of free time, and declining frequency of regular newspaper buying among young people.  We may incur increasing costs competing for advertising expenditures and paid print and digital subscriptions.  If we are not able to compete effectively for advertising expenditures and paid print and digital subscriptions, our revenue may decline and our financial condition and results of operations may be adversely affected.

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

Our quarterly revenue and results of operations are subject to seasonal and cyclical fluctuations that we expect to continue to affect our results of operations in future periods.  Our first quarter of the year tends to be our weakest quarter because advertising volume is typically at its lowest levels following the holiday season.  Our fourth quarter tends to be our strongest quarter primarily because of revenue from holiday season advertising.  Our quarterly revenue also varies based on the dynamics of the television broadcast industry.  In particular, we experience fluctuations, primarily during our third and fourth quarters, during political voting periods as advertising significantly increases.  Also, since NBC has exclusive rights to broadcast the Olympics through 2020, our NBC affiliated stations experience increased viewership and revenue during Olympics broadcasts in the first or third quarters of the years in which the Olympics are held.  Other factors that affect our quarterly revenue and results of operations may be beyond our control, including changes in the pricing policies of our competitors, the hiring and retention of key personnel, wage and cost pressures, changes in newsprint prices, changes in the buying strategies of advertisers and general economic factors.  These quarterly fluctuations in revenue and results of operations may cause our stock price to be volatile.

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

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

Our acquisition strategy includes certain risks. For example:

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

· we may not be able to secure additional financing necessary to complete acquisitions;

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

· we may fail to achieve anticipated financial benefits from acquisitions;

· we may encounter regulatory changes or delays or other impediments in connection with proposed transactions;

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· we may not be able to pursue acquisitions in certain of our markets because of FCC regulations which limit the number of television and radio stations that can be owned in a market;

· our acquisition strategy may divert management’s attention from the day-to-day operation of our businesses;

· key personnel at acquired companies may leave employment; and

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

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

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

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

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

The broadcast media industry is subject to evolving media technologies and evolving industry standards, as well as approaches to content distribution.  Several new technologies are being developed and/or utilized that may compete with our radio stations, including:

· audio programming by cable television systems, direct broadcast satellite systems, personal communications and wireless systems, Internet content providers and other digital audio broadcast formats, including the ability to create personalized formats and content;

· wireless Internet technology in the automobile and satellite digital audio radio service, with enhanced sound quality comparable to that of compact discs and that provide numerous niche formats;

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

· Internet radio stations and Internet radio services;

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

· enhanced capabilities of smart phones, MP3 players, tablet devices, electronic readers and other mobile devices; and

· portable digital devices and systems that permit users to listen to programming on a time-delayed basis.

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

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

New technologies and content distribution avenues could also adversely affect our television stations.  Programming alternatives such as cable, direct-to-home satellite services, mobile media services, pay-per-view, on-demand programming, the Internet, including Internet capability built into televisions, and home video and entertainment systems have fractionalized television viewing audiences.  Over the past decade, MVPDs have captured an increasing market share, while the aggregate viewership of the major television networks has declined.  In addition, the expansion of cable television and other technological changes, including the entry by certain telecommunications companies into the video services delivery market, and the launch of “over-the-top” providers that deliver video programming directly to viewers over the Internet has increased, and may continue to increase, competitive demand for programming.  Such increased demand, together with rising production costs may, in the future, increase our programming costs or impair our ability to acquire programming.  The enhanced video and audio capabilities of smart phones, MP3 players, tablet devices, electronic readers and other mobile devices and the increasing distribution of programming over these devices and the Internet also have the potential to affect television viewership.

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

Increased use by consumers of digital video recording technologies may decrease viewership of advertisements and result in decreased advertising revenues for our television stations.

Digital video recording technologies offered by cable and satellite systems allow viewers to digitally record, store and play back television programming at a later time.  Most of these technologies permit viewers to fast forward through advertisements; however, a digital video recording system introduced by satellite provider DISH Network in 2012 permits viewers that record and play back programming to skip advertisements entirely, subject to certain time limitations.  The major broadcast networks have challenged the DISH ad-skipping technology in court, and the outcome of the litigation is unknown.  The use of these technologies may decrease viewership of commercials as recorded by media measurement services such as Nielsen Media Research and, as a result, lower the advertising revenues of our television stations.  The current ratings provided by Nielsen for use by broadcast stations are limited to live viewing plus viewing of a digitally recorded program within certain time periods including same day viewing and viewing within three and seven days.  The effects of new ratings system technologies including people meters and set-top boxes, and the ability of such technologies to be a reliable standard that can be used by advertisers is currently unknown.

Security breaches, computer malware or other “cyber attacks” could harm our business by disrupting our delivery of services and damaging our reputation.

Our operations routinely involve receiving, storing, processing and transmitting sensitive information pertaining to our business and our customers. Any unauthorized intrusion, malicious software infiltration, network disruption, denial of service, or similar act by any malevolent party could disrupt the integrity, continuity, security and trust of our systems or the systems of our clients or vendors. These events could create financial liability, regulatory sanction, or a loss of confidence in our ability to serve clients or cause current or potential clients to choose another service provider.

If the network programming we broadcast pursuant to network affiliation agreements does not maintain satisfactory viewership levels or if the networks we are affiliated with terminate or do not renew our affiliation agreements, our advertising revenues, financial condition and results of operations may be adversely affected.

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

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Changes in the relationship of television networks with their affiliates and other content providers and distribution channels also could affect our results of operation.  For example, networks and other content providers recently have begun to sell programming content through new distribution channels and offer viewers the ability to watch programs on-demand, rather than on an established “live” television broadcast schedule.

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

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

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

We employ or contract with a number of on-air personalities and hosts of television and radio programs whose ratings success depends in part on audience loyalty in their respective markets.  Although we have entered into long-term agreements with some of our key on-air talent and program hosts to protect our interests in those relationships, we cannot assure you that all or any of these key employees will remain with us over the long term.  Furthermore, the popularity and audience loyalty to our key on-air talent and program hosts is highly sensitive to rapidly changing public tastes.  A loss of such popularity or audience loyalty could reduce ratings and may impact our ability to generate advertising revenue.

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

Changes in the professional sports industry or changes in our contractual relationships with local professional sports teams could result in decreased ratings for our Milwaukee radio station and adversely affect our results of operations and financial condition.

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

If cable systems and other video distribution systems do not carry our digital channels or we do not enter into acceptable agreements with such systems, our revenue and results of operations may be adversely affected.

Since our television stations are highly dependent on carriage by cable and satellite systems in many of the areas they service, any modifications to rules regarding the obligations of cable systems or satellite providers to carry digital television signals of local broadcast stations could result in some of our television stations or channels not being carried on cable systems or direct to home satellite systems, which could adversely affect our revenue and results of operations.  We have elected retransmission consent rather than must-carry with cable systems and satellite providers for most of our television stations. If we are unable to negotiate retransmission consent agreements in a timely manner or on favorable economic terms, some of our stations may not be carried on certain cable or direct to home satellite systems for a period of time and our revenue and results of operations could be adversely affected.  We may also be unable to negotiate or renegotiate acceptable agreements with other types of video distribution systems, such as telecommunications companies or over-the-top providers that deliver programming over the Internet which could also cause our revenue and results of operations to be adversely affected.  Changes in the Communications Act or the FCC’s rules with respect to the negotiation of retransmission consent agreements between broadcasters and MVPDs could also adversely impact our ability to negotiate acceptable transmission consent agreements.  In addition, continued consolidation among cable television operators could adversely impact our ability to negotiate acceptable retransmission consent agreements.  In February 2014, Comcast Corporation, the largest cable television operator, announced that it was acquiring Time Warner Cable, Inc., which is the second largest cable television operator.  The transaction remains subject to regulatory approvals of the Department of Justice and the FCC.  There is pending a Supreme Court lawsuit challenging the ability of certain over-the-top providers that deliver programming via the Internet to retransmit broadcast signals without compensating the station owner.  A determination by the Supreme Court that this practice is lawful could negatively impact our ability to negotiate favorable retransmission consent agreements in the future and could adversely affect our revenues and result of operations.

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

Our business depends upon maintaining our broadcast licenses, which are issued by the FCC for a term of eight years and are renewable.  Our timely-filed renewal applications for stations WTMJ-TV, WTMJ-AM, WFTX-TV, KHTT-FM, KEZO-FM, KQTH-FM, WSYM-TV, WTVF-TV, WACY-TV and WGBA-TV (and related low-power station WTKI-CA) have not been granted by the FCC.  Pursuant to FCC rules, our broadcast licenses for these stations remain in effect pending processing by the FCC of their timely filed renewal applications.  Interested parties may challenge a renewal application.  The FCC has the authority to revoke licenses, not renew them, or renew them with conditions, including renewals for less than a full term.  We cannot assure you that our pending or future renewal applications will be approved, or that the renewals, even if granted, will not include conditions or qualifications that could adversely affect our operations.  If we fail to renew any of our licenses, or renew them with substantial conditions or modifications (including renewing one or more of our licenses for a term of fewer than eight years), it could prevent us from operating the affected station and generating revenue from it.

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

If we or any of our officers, directors or significant shareholders materially violate the FCC’s rules and regulations or are convicted of a felony or are found to have engaged in unlawful anticompetitive conduct or fraud upon another government agency, the FCC may, in response to a petition by a third party or on its own initiative, in its discretion, commence a proceeding to impose sanctions upon us that could involve the imposition of monetary penalties, the denial of a license renewal application, revocation of a broadcast license or other sanctions.  If the FCC were to issue an order denying a license renewal application or revoking a license, we would be required to cease operating the broadcast station only after we had exhausted all administrative and judicial review without success. In addition, the FCC has recently emphasized more vigorous enforcement of certain of its regulations, including indecency standards, sponsorship identification requirements, the prohibition on “payola” and equal employment opportunity outreach and recordkeeping requirements. These enhanced enforcement efforts could result in increased costs associated with the adoption and implementation of stricter compliance procedures at our broadcast facilities or FCC fines.

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

The Federal Trade Commission, the United States Department of Justice and the FCC carefully review our proposed business acquisitions and dispositions under their respective regulatory authority, focusing on the effects on competition, the number and types of stations owned in a market and the effects on concentration of market revenue share.  The Department of Justice has challenged proposed acquisitions of radio and television stations, particularly in instances where an existing licensee seeks to acquire additional stations in the same market.  Some of these challenges ultimately resulted in consent decrees requiring, among other things, divestitures of certain stations.  In general, the Department of Justice has more closely scrutinized broadcast station acquisitions that result in local market shares in excess of 40% of advertising revenue.  Any delay, prohibition or modification required by regulatory authorities could adversely affect the terms of a proposed transaction or could require us to modify or abandon an otherwise attractive acquisition opportunity.  The filing of petitions or complaints against us or any FCC licensee from which we acquire a station could result in the FCC delaying the grant of, refusing to grant, or imposing conditions on its consent to the assignment or transfer of control of licenses.

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

The radio and television broadcasting industry is subject to extensive and changing federal regulation.  Among other things, the Communications Act of 1934, as amended, and FCC rules and policies require FCC approval for transfers of control and assignments of licenses, and limit thenumber and types of broadcast properties in a market in which any person or entity may have an attributable interest.  Media ownership restrictions include a variety of limits on local ownership, such as a limit of one television station in medium and smaller markets and two stations in larger marketsaslong as one station is not a top-four rated station (known as the duopoly rule), a prohibition on ownership of a daily English-language newspaper and a television or radio station in the same market, and limits both on the ownership of radio stations, and on common ownership of radio stations and television stations, in the same local market.  In December 2011, the FCC issued a Notice of Rulemaking (“Ownership NPRM”) proposing to modify the newspaper broadcast cross-ownership rule and to eliminate the radio television cross-ownership rule.  The Ownership NPRM also raises questions regarding whether the regulatory treatment of joint operating agreements between television stations in a market that are not commonly owned, including agreements for joint sales of advertising time, news sharing, and the provision of technical, promotional, and back-office services, should be changed.  Currently, such arrangements are common among television stations in medium and smaller television markets where ownership of more than one television station is not permitted and the station providing services is not deemed to have an attributable interest in the station receiving services.  In the Ownership NPRM the FCC requested comments regarding whether such joint operating arrangements should be considered attributable.  In addition, in a separate rulemaking proceeding that was issued in 2004, the FCC requested comments regarding whether a television station that sells more than 15% of the advertising inventory for another separately owned television station in a market pursuant to a joint sales agreement should be deemed to have an attributable interest in that station.  We are unable to predict the outcome of either the Ownership NPRM or the proceeding regarding joint sales agreements or of requests for review or appeals of any rule changes adopted by the FCC.

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In addition, the 2004 Consolidated Appropriations Act prohibits any person or entity from having an attributable interest in broadcast television stations with an aggregate audience reach exceeding 39% of television households nationally.  The increase in the national television viewership cap gave the largest television operators the ability to continue to hold or to acquire additional stations, which may give them a competitive advantage over us, since they have much greater financial and other resources than we have.  In addition, the networks’ ability to acquire additional stations could give them “leverage” over their affiliates on issues such as compensation, program clearance and program distribution other than through their affiliates, in part because of the risk that a network facing an uncooperative affiliate could acquire a station in the market and terminate its agreement with that affiliate.  In calculating the number of households a station reaches, the FCC attributes a UHF television station with only 50% of the television households in a market.  An FCC proceeding proposing to eliminate the UHF discount is pending.  If the proposal were to be adopted, it could limit the ability of the largest television operators to continue to acquire additional television stations.

Congress, the FCC or other federal agencies may in the future consider and adopt new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation, ownership and profitability of our television and radio stations and result in the loss of audience share and advertising revenue for our stations.  Examples of such changes include:

· proposals to increase regulatory fees or to impose spectrum use or other fees on FCC licenses;

· proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages;

· proposals to limit the tax deductibility of advertising expenses by advertisers;

· proposals to impose sales tax on advertising expense;

· proposals to revise the rules relating to political broadcasting;

· proposals to require broadcast stations to operate studios in the communities to which they are licensed, requiring construction of new studios, and to provide staffing on a 24 hour per day basis; and

· proposals to require radio broadcasters to pay royalties to musicians and record labels for the performance of music played on the stations.

The FCC’s National Broadband Plan may result in a loss of spectrum for our stations and potentially adversely impact our ability to compete.

In February 2012, Congress passed and the President signed legislation that, among other things, grants the FCC authority to conduct incentive auctions to recapture certain spectrum currently used by television broadcasters and repurpose it for other uses.  In October 2012, the FCC released a Notice of Proposed Rulemaking to begin to develop the rules and procedures to implement incentive auctions authorized by Congress.  That rulemaking process remains ongoing.

The incentive auction process would have three components.  First, the FCC would conduct a reverse auction by which each television broadcaster may choose to retain its rights to a 6 MHz channel of spectrum or volunteer, in return for payment, to relinquish all of the station’s spectrum by surrendering its license; relinquish the right to some of its spectrum and thereafter share spectrum with another station; or modify its UHF channel license to a VHF channel license.  Second, in order to accommodate the spectrum reallocated to new users, the FCC will “repack” the remaining television broadcast spectrum, which may require certain television stations that did not participate in the reverse auction to modify their transmission facilities, including requiring such stations to operate on different channels.  In addition, Congress directed the FCC, when repacking television broadcast spectrum to make reasonable efforts to preserve a station’s coverage area and population served.  Also, the FCC is prohibited from requiring a station to move involuntarily from the UHF band to the VHF band or from the high VHF band to the low VHF band.  The statue does not protect low power stations in the repacking process.  Third, the FCC would conduct a forward auction of the relinquished spectrum to new users.  The FCC must complete the reverse auction and the forward auction by September 30, 2022, and has announced that as of now it intends to conduct the auction during 2015.

The outcome of the incentive auction and repacking of broadcast television spectrum, or the impact of such items on our business, cannot be predicted.

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The performance of our NBC affiliates may suffer due to Comcast’s ownership of NBC Universal.

In January 2011, Comcast and General Electric Company (“GE”), the parent of NBC Universal (“NBCU”) consummated a joint venture in which the programming assets of Comcast and NBCU were combined and Comcast acquired a controlling interest in NBCU.  The FCC approved the joint venture in January 2011.  In 2013, Comcast aquired GE’s remaining interest in NBCU.  Comcast’s control and ownership of NBCU could impact our NBC-affiliated television stations.  We currently have a network affiliation agreement with NBC Universal for two of our television stations and a retransmission consent agreement with Comcast for distribution of several of our television stations.  Comcast’s control and ownership of NBCU could reduce our ability to negotiate favorable terms under future network affiliation and cable carriage agreements.  In addition, Comcast could provide popular NBC sports and entertainment programming on additional outlets including co-owned cable channels and the Internet.  Comcast’s ownership of NBCU may affect the economic incentives that currently form the basis of the network/affiliate relationship, and, over time, may result in the evolution of the network/affiliate relationship so that local affiliates become less important to the network.  The FCC Order approving the 2011 joint venture included certain conditions, many of which were contained in private agreements between Comcast and the major-network affiliate associations, to mitigate these concerns.  Most of these conditions expire in 2017, and Comcast’s ownership of NBCU could ultimately affect the profitability of our NBC affiliated stations.

The failure or destruction of satellites and transmitter facilities that we depend upon to distribute our programming could materially adversely affect our business and results of operation.

We use studios, satellite systems, transmitter facilities and the Internet to originate, receive and distribute our station programs and network programs and commercials.  We rely on third-party contracts and services to operate our origination and distribution facilities.  These third-party contracts and services include, but are not limited to, electrical power, satellite transponders, uplinks and downlinks and telecom circuits.  Distribution may be disrupted due to one or more third parties losing their ability to provide particular services to us, which could adversely affect our distribution capabilities.  A disruption can be caused as a result of any number of events such as local disasters (accidental or environmental), various acts of terrorism, power outages, major telecom connectivity failures or satellite failures.  Our ability to originate, receive or distribute programming may be disrupted for an undetermined period of time until alternate facilities are engaged and put on-line.  Furthermore, until third-party services resume, the inability to originate or distribute programming could have a material adverse effect on our business and results of operations.

Proposed legislation could require radio broadcasters to pay royalties to record labels and recording artists.

Legislation has been previously introduced in Congress that would require radio broadcasters to pay a royalty to record labels and performing artists for use of their recorded songs.  Thus far, the legislation failed to pass but it may be reintroduced in the future.  Currently, we pay royalties to song composers and publishers through Broadcast Music, Inc. (“BMI”), the American Society of Composers, Authors and Publishers (“ASCAP”) and SESAC, Inc. (“SESAC”).  The proposed legislation would add an additional layer of royalties to be paid directly to the record labels and artists.  It is not currently known what proposed legislation, if any, will become law, whether industry groups will enter into an agreement with respect to fees, and what significance this royalty would have on our operations and financial results.

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

Public concern over methods of information gathering has led to the enactment of legislation in most jurisdictions that restricts the collection and use of consumer information.  Our publishing business relies in part on telemarketing sales, which are affected by “do not call” legislation at both the federal and state levels.  We also engage in e-mail marketing and the collection and use of consumer information in connection with our publishing and broadcasting businesses and our growing digital efforts.  Further legislation, government regulations, industry regulations, the issuance of judicial interpretations or a change in customs relating to the collection, management, aggregation and use of consumer information could materially increase the cost of collecting that data, or limit our ability to provide information to our customers or otherwise utilize telemarketing or e-mail marketing or distribute our digital products across multiple platforms, and could adversely affect our results of operations.

Decreases in circulation may adversely affect our revenues, and circulation decreases may accelerate as we offer expanded digital content and digital subscriptions.

Advertising and circulation revenues are affected by the number of subscribers and single copy purchasers, readership levels and overall audience reach.  Our daily newspaper, and the newspaper industry as a whole, is experiencing difficulty maintaining paid print circulation and related revenues.  This is due to, among other factors, increased competition from new media products and sources other than traditional newspapers (often free to users), and shifting preferences among some consumers to receive all or a portion of their news other than from a newspaper.  In addition, our expanded digital content and new digital subscriptions could negatively impact print circulation volumes if readers cancel subscriptions.

A prolonged decrease in net paid circulation copies could have a material effect on our revenues, particularly if we are not able to otherwise grow our readership levels and overall audience reach.  To maintain our circulation base, we may incur additional costs, and we may not be able to recover these costs through circulation and advertising revenues.

23

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

The basic raw material for newspapers and shoppers is newsprint.  Our newsprint consumption related to our publications totaled $14.1 million in 2013, which was 9.1% of our total publishing revenue.  In 2013, we purchased the majority of our newsprint requirements through a purchasing agent, which has the option to purchase newsprint from multiple suppliers.  We may purchase additional newsprint in the spot market from other suppliers.  Our inability to obtain an adequate supply of newsprint in the future or significant increases in newsprint costs could have a material adverse effect on our financial condition and results of operations.

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

The publishing industry is being challenged by the preferences of today’s “on demand” culture, particularly among younger segments of the population.  Some consumers prefer to receive all or a portion of their news in new media formats and from sources other than traditional newspapers.  Information delivery and programming alternatives such as the Internet, various mobile devices, electronic readers, cable, direct satellite-to-home services, pay-per-view and home video and entertainment systems have fractionalized newspaper readership.  New digital subscription offerings may not attract readers in sufficient numbers to generate significant revenues or offset losses in paid print circulation revenues.  The shift in consumer behaviors has the potential to introduce new market competitors or change the means by which traditional newspaper advertisers can most efficiently and effectively reach their target audiences.  We may not have the resources to acquire new technologies or to introduce new products or services that could compete with these evolving technologies.

Other Business Risks

Our business has been and may be in the future negatively affected by an impairment charge of goodwill, broadcast licenses or other intangible assets.

In 2012, due to declines in revenue share, declines in projected long-term market revenues, and a reduction in radio perpetuity growth rates, we recorded a pre-tax, non-cash impairment charge for broadcast licenses of $1.7 million.  In 2011, due to a decline in projected long-term market revenues and an increase in discount rates, we recorded a pre-tax, non-cash impairment charge for broadcast licenses of $0.9 million.  There was no impairment of our goodwill in 2011, 2012 or 2013.  As of December 29, 2013, we had a total of $317.6 million of goodwill, broadcast licenses and other intangible assets on our balance sheet, representing 53.4% of our total assets.  The 2013 and 2012 impairment charges had, and any future non-cash impairment charge of goodwill, broadcast licenses or other intangible assets would have, an adverse effect on our financial condition and results of operations.

We may not be able to utilize deferred tax assets to offset future federal and state taxable income.

As of December 29, 2013, we had a total of $22.6 million of deferred tax assets on our balance sheet.  We expect to realize the deferred tax assets to reduce our consolidated federal and state income tax liabilities over a period of time not to exceed 20 years.  However, we may not be able to fully realize the deferred tax assets if our future federal and state taxable income and related income tax liability are insufficient to permit their use.  In the future, we may be required to record a valuation allowance against the deferred tax assets if we believe we are unable to realize them, which would have an adverse effect on our financial condition and results of operations.  In addition, if statutory tax rates are ever reduced, our overall deferred tax asset would be required to be revalued, which could also have an adverse effect on our financial condition and results of operation.

The economic environment or a return to volatility in US credit markets could affect our financing arrangements.

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 severely constrained with an adverse impact on our ability to operate our businesses.  In addition, our ability to meet our credit agreement’s financial covenants may also be affected by events beyond our control, including a further deterioration of current economic and industry conditions, which could negatively affect our earnings.  If it is determined we are not in compliance with these financial covenants, the lenders in our credit facility syndicate will be entitled to take certain actions, including acceleration of all amounts due under the facility.  If the lenders take such action, we may be forced to amend the terms of the credit agreement, obtain a waiver or find alternative sources of capital. Obtaining new financing arrangements or amending our existing one may result in significantly higher fees and ongoing interest costs as compared to those in our current arrangement.  If we are unable to obtain alternative sources of capital, it may be necessary to significantly restructure our business operations or sell assets, or, in the event of a prolonged and extensive economic decline, seek bankruptcy protection.

Our acquisition of NewsChannel5 Network, LLC in Nashville in December 2012 was financed by borrowings under our amended and restated credit facility, which borrowings substantially increased our debt service obligations. As a result, we may have less cash flow available for business operations, we could become increasingly vulnerable to general adverse economic and industry conditions and interest rate trends, and our ability to obtain future financing may be limited.

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We entered into an amendment and restatement to our then existing credit facility in December 2012 to provide for a secured term loan and revolving credit facility with initial aggregate commitments of $350 million to fund the purchase price for NewsChannel5 Network, LLC in Nashville and for general corporate purposes.  As of December 29, 2013, we had $195.0 million in borrowings under our amended and restated credit facility.

Our ability to make required payments of principal and interest on our debt will depend on future performance of our businesses, which, to a certain extent, is subject to general economic, financial, competitive and other factors that are beyond our control.  In addition, our secured amended and restated credit facility contains financial and restrictive covenants that may limit our ability to, among other things, borrow additional funds or take advantage of business opportunities.  Our failure to comply with such covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all our indebtedness or otherwise have a material adverse effect on our financial position, results of operation and debt service capability.

Our increased level of debt and the financial and restrictive covenants contained in our secured amended and restated credit facility could have important consequences on our financial position and results of operations, including increasing our vulnerability to general adverse economic and industry conditions and detraction from our ability to successfully withstand a downturn in our markets or the economy generally; requiring us to dedicate a substantial portion of our cash flow from operations to required payments on debt; limiting our ability to obtain additional financing in the future; and making us vulnerable to increase in interest rates because debt under our secured amended and restated credit facility bears interest at variable rates.

Our growth strategy includes future acquisitions which involve inherent risk.

In order to increase our market presence and advertising reach, we may make strategic business acquisitions that we believe complement our businesses.  Acquisitions have inherent risks which may have a material adverse effect on our business, financial condition, or results of operations, including, among other things:  (1) failure to successfully integrate the purchased operations, technologies, products or services and maintain uniform standard controls, policies and procedures; (2) substantial unanticipated integration costs; (3) loss of key employees including those of the acquired business; (4) diversion of management’s attention from other operations; (5) failure to retain the customers of the acquired business; (6) failure to achieve any projected synergies and performance targets; (7) additional debt and/or assumption of known or unknown liabilities; (8) potential dilutive issuances of equity securities; and (9) a write-off of goodwill, client lists, other intangibles and amortization of expenses.  If we fail to successfully complete acquisitions or integrate acquired businesses, we may not achieve projected results and there may be a material adverse effect on our business, financial condition and results of operations.

We may be unable to successfully integrate the operations of acquired businesses and may not achieve the cost savings and increased revenues anticipated as a result of these acquisitions.

Achieving the anticipated benefits of acquisitions will depend in part upon our ability to integrate these businesses in an efficient and effective manner. The integration of companies, stations or operations that have previously operated independently may result in significant challenges; we may be unable to accomplish the integration smoothly or successfully. In particular, the coordination of geographically dispersed organizations with differences in corporate cultures and management philosophies may increase the difficulties of integration. The integration of acquired businesses may also require the dedication of significant management resources, which may temporarily distract management’s attention from our day-to-day operations. In addition, the process of integrating operations may cause an interruption of, or loss of momentum in, the activities of one or more of our businesses and the loss of key personnel from our company or the acquired businesses.  Further, employee uncertainty and lack of focus during the integration process may disrupt the businesses of our company or the acquired businesses. We may not be able to realize the benefits of anticipated integration of sales forces, asset rationalization and systems integration.

Sustained increases in costs of providing pension benefits may adversely affect our operations, financial condition and liquidity.

We have a funded, qualified defined benefit pension plan that covers certain employees and an unfunded, non-qualified pension plan for certain employees whose benefits under the qualified pension plan may be restricted due to limitations imposed by the Internal Revenue Service.  Effective January 1, 2011, the benefit accruals under the qualified defined benefit pension plan and the unfunded, non-qualified pension plan were permanently frozen.  Two significant elements in determining pension income or pension expense are the discount rate used in projecting benefit obligations and the expected return on plan assets.  A lower discount rate driven by lower interest rates would increase our pension expense by increasing the calculated value of our liabilities.  If our expected return on plan assets is not achieved, our pension expense and cash contributions to the pension plans would increase.  As of the end of 2013, our pension plan remains underfunded.  If the equity markets do not sufficiently recover or the discount rate does not increase or existing legislative relief is not enough, we will be obligated to make substantial contributions in future years to fund the deficiency.  Current projections indicate we will need to contribute $22.9 million over the next four years, beginning in 2014.  A significant increase in our obligation to make contributions to our pension plans would reduce the cash available for working capital, debt reduction and other corporate uses, and may have an adverse effect on our operations, financial condition and liquidity.

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

We are dependent upon the efforts of our senior executive officers.  The success of our business is heavily dependent on our ability to retain our current management and to attract and retain qualified personnel in the future.  Competition for senior management personnel is intense, and we may not be able to retain our personnel.  We have not entered into employment agreements with our key personnel, other than with our Chairman and Chief Executive Officer, and these individuals may not continue in their present capacity with us for any particular period of time.  We have, however, entered into change in control agreements with certain of our senior executives which provide, within two years after a change in control, severance payments and benefits to the executive if his or her employment is terminated without cause or the executive resigns for good reason.  We do not have key man insurance for any of our executive officers or key personnel.  The loss of any senior executive officer could require the remaining executive officers to divert immediate and substantial attention to seeking a replacement.  Our inability to find a replacement for any departing executive officer on a timely basis could adversely affect our ability to operate and grow our business.

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

As of December 29, 2013, we and our subsidiaries had approximately 1,800 full-time and 900 part-time employees compared to approximately 1,800 full-time and 700 part-time employees at December 30, 2012.  Currently, there are 11 bargaining units representing approximately 600 (or approximately 22%) of our total number of employees.  We have entered into various collective bargaining agreements with these bargaining units.  Six of these agreements will expire within the next two years.

We cannot assure you the results of negotiations of future collective bargaining agreements or of negotiations related to reopening of collective bargaining agreements in order to reduce our labor costs or achieve other objectives will be negotiated without interruptions in our businesses.  We cannot assure you that strikes will not occur in the future in connection with labor negotiations or otherwise.  Any prolonged strike or work stoppage could have a material adverse effect on our financial condition and results of operations.  We also cannot assure you the impact of future collective bargaining agreements will not have an adverse effect on our financial condition and results of operations.

We also are subject to a wide variety of employment laws and regulations. Future changes in applicable requirements or regulatory or judicial interpretations of these requirements could have a material adverse effect on our financial condition and results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

Our corporate headquarters are located in Milwaukee, Wisconsin.  We believe all of our properties are well maintained, are in good conditions and suitable for present operations.  There are no material encumbrances on any of our owned properties.  Our equipment is secured by liens pursuant to our secured credit facility.   As of December 29, 2013, we have $160.5 million of net property and equipment secured by our credit facility.  The following are the principal properties operated by us and our subsidiaries and the approximate square footage as of December 29, 2013.

	Owned		Leased
Publishing
Printing plants, newsrooms, offices and distribution centers located in:
Milwaukee, WI (1)		500,000		5,000
West Milwaukee, WI (2)		479,000		-
Waupaca, WI		73,000		-
Waukesha, WI		34,000		-
Cedarburg, WI		17,000		-
Hartland, WI		13,000		-
Menomonee Falls, WI		12,000		-
Hartford, WI		7,000		-
New London, WI		6,000		-
West Bend, WI		-		5,000
Johnson Creek, WI		-		5,000
Port Washington, WI		-		5,000
Elkhorn, WI		-		4,000
Madison, WI		-		2,000
Wittenberg, WI		1,000
Jefferson, WI		-		1,000
Beaver Dam, WI		-		1,000
Mukwonago, WI		-		1,000
Broadcasting
Office, studios and transmitter and tower sites located in:
Milwaukee, WI (3)		109,000		-
Nashville, TN		51,000		10,000
Omaha, NE		22,000		-
Las Vegas, NV		33,000		-
Tucson, AZ		29,000		2,000
Boise, ID		28,000		1,000
Wichita, KS		23,000		6,000
Knoxville, TN (4)		26,000		-
Green Bay, WI		22,000		2,000
Tulsa, OK		22,000		1,000
Fort Myers, FL		21,000		1,000
Palm Springs, CA		19,000		1,000
Springfield, MO		2,000		14,000
Lansing, MI		2,000		11,000
Mount Bigelow, AZ		2,000		-

(1) Includes our corporate headquarters and Journal Sentinel, Inc.'s business and editorial offices.

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

(3) Includes our business operations' headquarters.

(4) Includes 5,000 square feet leased to third party pursuant to lease expiring in September 2015.

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ITEM 3. LEGAL PROCEEDINGS

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

Executive Officers of Registrant

The following table sets forth the names, ages and positions of our executive officers as of February 28, 2014.

Name	Title	Age
Steven J. Smith	Chairman of the Board and Chief Executive Officer	63
Andre J. Fernandez	President and Chief Financial Officer	45
Elizabeth Brenner	Executive Vice President	59
Mary Hill Taibl	Senior Vice President, General Counsel, Secretary and Chief Compliance Officer	59
Jason R. Graham	Senior Vice President of Finance and Controller	41
Michael O'Brien	Vice President	52
Royce A. Miles	Vice President	46
William M. Kaiser	Vice President	63
James P. Prather	Vice President	56
Karen O. Trickle	Vice President and Treasurer	57
Steven H. Wexler	Vice President	53
Deborah F. Turner	Vice President	52

Steven J. Smith is Chairman of the Board and Chief Executive Officer.  Mr. Smith was elected Chief Executive Officer in March 1998 and Chairman in December 1998.  Mr. Smith was President from 1992 to 1998 and from 2010 to February 2012.  He also added the title Chief Operating Officer in 1996.  Mr. Smith has been a director since May 2003.  Mr. Smith was a director of our predecessor company since 1987.

Andre J. Fernandez is President and Chief Financial Officer.  Mr. Fernandez started at our company in October 2008 as Executive Vice President of Finance and Strategy.  Mr. Fernandez was elected President in February 2012, Executive Vice President in October 2008 and Chief Financial Officer in November 2008.  Effective March 10, 2014, Mr. Fernandez will become President and Chief Operating Officer.  Prior thereto, Mr. Fernandez held various financial leadership positions with the General Electric Company (GE) since 1997, and most recently served as Senior Vice President, Chief Financial Officer and Treasurer for Telemundo Communications Group, Inc., a U.S. Spanish-language television network that was a wholly-owned division of NBC Universal.

Elizabeth Brenner is Executive Vice President.  Ms. Brenner was elected Executive Vice President in December 2004.  In addition, Ms. Brenner is Chief Operating Officer of our publishing businesses and has been President of Journal Sentinel, Inc. and Publisher of the Milwaukee Journal Sentinel since January 2005.  Ms. Brenner was Publisher of The News Tribune, a Tacoma, Washington publication of the McClatchy Company, from 1998 to December 2004.

Mary Hill Taibl is Senior Vice President, General Counsel, Secretary and Chief Compliance Officer.  Ms. Taibl was elected Senior Vice President and General Counsel in May 2003, Secretary in January 2008 and Chief Compliance Officer in April 2005.  Prior thereto, she served as Vice President and General Counsel-Business Services since July 2001.  Ms. Taibl was General Counsel Americas, GE Healthcare, a developer and manufacturer of medical diagnostic equipment, from January 1999 to July 2001.

Jason R. Graham is Senior Vice President of Finance and Controller.  Mr. Graham was elected Senior Vice President of Finance and Controller on February 11, 2014 and Vice President and Controller in June 2012.  Effective March 10, 2014, Mr. Graham will become Senior Vice President of Finance, Chief Financial Officer and Controller.  Prior thereto, Mr. Graham held various financial leadership positions with Brookdale Senior Living, Inc., a national owner and operator of senior living communities, since October 2006 where he most recently served as Vice President and Corporate Controller.  Mr. Graham has also previously held financial leadership positions with KPMG LLP, GE Healthcare and APW Ltd and is a certified public accountant.

Michael O’Brien is Vice President. Mr. O’Brien was elected Vice President in May 2010.  Prior thereto, he served as VP Information Systems at InfuScience, Inc., a privately held national home infusion provider, since April 2006. Mr. O’Brien was Director of  IT for Jefferson Wells International, a wholly owned subsidiary of Manpower Inc., from January 2003 to April 2006, the North American Director of IT for Datex-Ohmeda, a manufacturer of anesthesia and critical care medical equipment, from September 2001 to January 2003, and VP CIO at Alterra Healthcare, a national provider of assisted living services, from December 1998 to August 2001.

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Royce A. Miles is Vice President.  Mr. Miles was elected Vice President in April 2010.  In addition, Mr. Miles has been Executive Vice President and General Manager of our publishing businesses since September 2010.  Prior thereto, Mr. Miles held various other positions within Journal Sentinel, Inc. since October 1998.

William M. Kaiser is Vice President.  Mr. Kaiser was elected Vice President in April 2010.  In addition, Mr. Kaiser has been Senior Vice President of Journal Sentinel, Inc. and Editor of the Milwaukee Journal Sentinel since 1997.  Prior thereto, he was Managing Editor of the Milwaukee Journal Sentinel and Milwaukee Journal.

James P. Prather is Vice President.  Mr. Prather was elected Vice President in March 1999, and is an Executive Vice President of our broadcasting business and General Manager of KTNV-TV.  In addition, Mr. Prather served as Executive Vice President, Television and Radio Operations of Journal Broadcast Group from April 2005 until January 22, 2014 and President of News from August 2003 until January 22, 2014.  He was Senior Vice President and President of News, Journal Broadcast Group from August 2003 to April 2005.  Mr. Prather was President-Television, Journal Broadcast Group from December 1998 to August 2003 and General Manager of WTMJ-TV from 1995 to August 2003.

Karen O. Trickle is Vice President and Treasurer.  Ms. Trickle was elected Treasurer in December 1996 and Vice President in March 1999.

Steven H. Wexler is Vice President and Executive Vice President of Radio for our broadcasting business.  Mr. Wexler was elected Vice President in May 2007, and Executive Vice President of Radio on January 22, 2014.  Mr. Wexler has been an Executive Vice President of Journal Broadcast Group since January 2007.  From 2005 to 2006, Mr. Wexler was Senior Vice President of Journal Broadcast Group and he held various other positions within Journal Broadcast Group from 1993 to 2004.

Deborah F. Turner is Vice President and Executive Vice President of Television for our broadcasting business.  Ms. Turner was elected Vice President in January 2014 and Executive Vice President of Television on January 22, 2014.  In addition, Ms. Turner serves as the President and General Manager of the NewsChannel 5 Network, LLC in Nashville, Tennessee, which was acquired by Journal Communications, Inc. in December 2012.  Ms. Turner was first elected as an Executive Vice President of Journal Broadcast Group in 2013.

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

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

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

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

Class A shares are listed for trading on the New York Stock Exchange under the symbol “JRN.”  Class A shareholders are entitled to one vote per share.

Class B shares are primarily held by our current and former employees, our non-employee directors and members of the family of our former chairman Harry J. Grant and entities for the benefit of members of the family (which we collectively refer to as the “Grant family shareholders”).  These shares are entitled to ten votes per share.  Each class B share is convertible into one class A share at any time, but first must be offered for sale to other eligible purchasers through the offer procedures set forth in our amended and restated articles of incorporation.  There is no public trading market for the class B shares, although shares can be offered for sale to eligible purchasers under our amended and restated articles of incorporation.

In August 2012, we repurchased all 3.3 million outstanding shares of class C common stock, including all rights associated with such shares of class C common stock, from the Grant family shareholders.

As of February 28, 2014, there were 88 record holders of Class A common stock and 1,530 holders of class B common stock.  We have no outstanding shares of class C common stock or preferred stock.

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The following table provides information about our repurchases of our class A and B common stock for the fourth quarter ended December 29, 2013:

Issuer Purchases of Equity Securities
	(a)			(b)		(c)		(d)
Period	Total Number of Shares Purchased			Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans Or Programs		Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
September 30, 2013 to October 27, 2013		-			-		-	$	37,353,739
October 28, 2013 to November 24, 2013		-			-		-	$	37,353,739
November 25, 2013 to December 29, 2013		9,435	(2)		-		-	$	37,353,739

(1) 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.  In December 2013, our board of directors extended the repurchase propgram through fiscal 2015.

(2) Represents 9,435 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.

The high and low sales prices of our class A common shares for the four quarters of 2013 and 2012 as reported on the New York Stock Exchange and the dividends declared per class A and class B common share for the four quarters of 2013 and 2012 were as follows:

	2013						2012
					Cash						Cash
	High		Low		Dividend		High		Low		Dividend
First Quarter	$	6.88	$	5.00	$	-	$	5.72	$	4.38	$	-
Second Quarter		7.75		5.80		-		5.70		3.94		-
Third Quarter		9.52		7.04		-		5.85		4.80		-
Fourth Quarter		9.75		7.71		-		5.78		4.80		-

Dividends

The declaration of future dividends is subject to the discretion of our board of directors in light of all relevant factors, including earnings, general business conditions, working capital requirements, capital spending needs, debt levels and contractual restrictions.  Our board of directors periodically reviews our dividend payment policy and our ability to pay cash dividends. Our secured credit facility contains restrictions on the payment of dividends, such that the aggregate amount of cash dividends paid and share repurchases does not exceed the greater of $30.0 million and such amount that the pro forma ratio is greater than 1.20 to 1.00 for the consecutive four quarter period preceding the quarter in which such cash payment is made.  Pursuant to our amended and restated articles of incorporation, each class of common stock has equal rights with respect to cash dividends.

In April 2009, our board of directors suspended dividends on our class A and class B shares, and suspended the payment of the cumulative minimum unpaid and undeclared dividend on our formerly outstanding class C shares.  Prior to the August 2012 repurchase of our class C shares, the accumulated minimum class C dividend of approximately $0.14 per share each quarter was required to be paid prior to the payment of any dividends on our class A and class B shares.

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Stock Performance Information

The following information in this Item 5 of this Annual Report on Form 10-K is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference into such a filings.

The following graph compares, on a cumulative basis, changes in the total return on our class A common stock with the total return on the Standard & Poor’s 500 Stock Index and the total return on a peer group comprised of eight corporations that concentrate on newspapers and broadcast operations.  Our peer group is comprised of Belo Corp., Gannett Company, Inc., Lee Enterprises, Inc., The McClatchy Company, The New York Times Company, The E. W. Scripps Company, Media General, Inc. and The Washington Post Company.  This graph assumes the investment of $100.00 on December 31, 2008 and the reinvestment of any dividends since that date.

	12/08	12/09	12/10	12/11	12/12	12/13
Journal Communications, Inc	100.00	163.00	210.99	191.13	213.88	378.12
S&P 500 Index	100.00	126.46	145.51	148.59	172.37	228.19
Peer Group	100.00	215.75	209.25	173.93	221.79	405.58

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ITEM 6. SELECTED FINANCIAL DATA

The following table presents our selected financial data.  The selected financial data for the years ended December 29, 2013, December 30, 2012, and December 25, 2011 and as of December 29, 2013, and December 30, 2012, have been derived from our audited consolidated financial statements, including the notes thereto, appearing elsewhere in this Annual Report on Form 10-K.  The selected financial data for the years ended December 26, 2010 and December 27, 2009 and as of December 25, 2011, December 26, 2010 and December 27, 2009, have been derived from our audited consolidated financial statements, including the notes thereto, not included in this Annual Report on Form 10-K.  This table should be read together with our other financial information, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements, including the notes thereto, appearing elsewhere in this Annual Report on Form 10-K.

	2013(1)			2012(2)				2011(3)				2010				2009(4)
	(dollars and shares in thousands, except for per share amounts)
Statement of Operations Data
Revenue	$	397,267		$	393,118			$	351,452			$	370,942			$	360,079
Operating costs and expenses		345,951			332,771				311,175				318,726				329,837
Broadcast license impairment		-			1,616				735				-				18,953
Operating earnings		51,316			58,731				39,542				52,216				11,289
Total other income and (expense)		(7,894	)		(4,461	)			(3,525	)			(3,281	)			(2,803	)
Earnings from continuing operations before income taxes		43,422			54,270				36,017				48,935				8,486
Provision for income taxes		17,172			21,688				14,304				18,730				2,565
Earnings from continuing operations		26,250			32,582				21,713				30,205				5,921
Gain (loss) from discontinued operations, net of taxes		(49	)		743				473				4,176				(1,614	)
Net earnings	$	26,201		$	33,325			$	22,186			$	34,381			$	4,307
Diluted weighted average shares outstanding		50,436			50,091				51,088				50,789				50,400
Diluted - Class A and B common stock :	$	0.52		$	0.60			$	0.36			$	0.52			$	0.05
Continuing operations
Discontinued operations		-			0.01				0.01				0.07				-
Net earnings	$	0.52		$	0.61			$	0.37			$	0.59			$	0.05
Cash dividends:
Minimum class C	$	-		$	0.35		(5)	$	0.57		(6)	$	0.57		(6)	$	0.57
Class B	$	-		$	-			$	-			$	-			$	0.02
Class A	$	-		$	-			$	-			$	-			$	0.02
Segment Data
Revenue:
Broadcasting	$	243,432		$	228,703			$	180,739			$	188,548			$	166,036
Publishing		154,558			164,947				170,976				182,799				194,196
Corporate		(723	)		(532	)			(263	)			(405	)			(153	)
Total revenue	$	397,267		$	393,118			$	351,452			$	370,942			$	360,079
Operating earnings (loss):
Broadcasting	$	45,412		$	54,967			$	30,761			$	42,751			$	4,719
Publishing		13,778			11,622				15,901				18,222				13,796
Corporate		(7,874	)		(7,858	)			(7,120	)			(8,757	)			(7,226	)
Total operating earnings	$	51,316		$	58,731			$	39,542			$	52,216			$	11,289

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	2013(1)			2012(2)			2011(3)			2010			2009(4)
	(dollars and shares in thousands, except for per share amounts)
Other Financial Data
Depreciation	$	20,058		$	20,590		$	21,261		$	22,101		$	23,342
Amortization	$	2,855		$	1,448		$	1,381		$	1,890		$	619
Capital expenditures	$	12,440		$	12,305		$	10,590		$	9,374		$	7,276
Cash dividends	$	-		$	-		$	-		$	-		$	1,476
Cash Flow Data
New cash provided by (used for):
Operating activities	$	53,416		$	75,256		$	43,760		$	70,357		$	68,879
Investing activities	$	(17,030	)	$	(239,897	)	$	(8,812	)	$	6,192		$	(9,846	)
Financing activities	$	(37,504	)	$	162,666		$	(36,859	)	$	(79,739	)	$	(65,147	)
Discontinued operations	$	601		$	1,987		$	2,273		$	1,953		$	5,426
Balance Sheet Data
Property and equipment, net	$	160,549		$	169,138		$	165,929		$	177,015		$	192,326
Intangible assets, net	$	317,631		$	316,002		$	109,109		$	111,672		$	112,811
Total assets	$	596,018		$	625,803		$	417,725		$	431,770		$	473,187
Total debt	$	208,229		$	246,030		$	41,305		$	74,570		$	151,375
Total equity	$	250,087		$	205,501		$	206,188		$	208,927		$	171,075

(1) On May 3, 2013, we completed the purchase of WNOX-FM in Knoxville, Tennessee.  Effective January 1, 2014, we closed on the sale of Palm Springs, California stations KMIR-TV and KPSE-LP which are reported as discontinued operations in all years presented.

(2) On June 25, 2012, we completed the purchase of KHTT-FM and KBEZ-FM in Tulsa, Oklahoma.  On October 22, 2012, we closed on the purchase of the remaining assets of WACY-TV in Appleton, Wisconsin.  On December 3, 2012, we completed the sale of WKTI-AM in Knoxville, Tennessee.  On December 3, 2012, we completed the sale of Hodag Buyers’ Guide, North Star Journal, Merrill Foto News, Wausau Buyers’ Guide, Stevens Point Buyers’ Guide, Wood County Buyers’ Guide, Waupaca Buyers’ Guide, Waupaca County Post East, Waupaca County Post West, Clintonville Shoppers’ Guide, New London Buyers’ Guide, Silent Sports, Waupacanow.com, Merrillfotonews.com, Starjournalnow.com, Silentsports.net, Wibuyersguide.com and a single copy distribution network based in Rhinelander, WI.  On December 6, 2012, we completed the acquisition of NewsChannel 5 Network, LLC in Nashville, Tennessee.

(3) In June 2011, we completed the sale of Pelican Press and Pelican Press Marketplace businesses, which operated in Sarasota, Florida.  In August 2011, we completed the sale of the remaining Florida-based community publications businesses, including Florida Mariner, Clay Today, Clay County Leader, Ponte Vedra Recorder, St. Augustine Underground, First Coast Register and Car Connection.

(4) On April 23, 2009, we completed the purchase of CW affiliate, KNIN-TV, in Boise, Idaho.  On September 25, 2009, we completed the sale of KGEM-AM and KCID-AM in Boise, Idaho.

(5) Minimum unpaid and undeclared dividend of $0.35 per share was accrued for part of 2012.

(6) Minimum unpaid and undeclared dividend of $0.57 per share was accrued for 2011 and 2010.

(7) The first quarter 2009 dividend of $0.142 per share was paid.  Minimum unpaid and undeclared dividend of $0.428 per share was accrued but not paid for the remaining three quarters of 2009.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS

The following discussion of our financial condition and results of operations should be read together with our audited consolidated financial statements for the three years ended December 29, 2013, including the notes thereto, appearing elsewhere in this Annual Report on Form 10-K.  This discussion contains forward-looking statements.  See “Forward-Looking Statements” for a discussion of uncertainties, risks and assumptions associated with these statements.

Overview

Our business segments are based on the organizational structure used by management for making operating and investment decisions and for assessing performance.  Our reportable business segments are: (i) broadcasting; (ii) publishing; and (iii) corporate.  Our broadcasting segment, operating in 11 states, consists of 13 television stations (excluding Palm Springs) and 35 radio stations.  Results from our digital media assets are included in our broadcasting and publishing segments.  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 publications, primarily in southeastern Wisconsin, as well as print facilities in West Milwaukee and Waupaca, Wisconsin.  Our corporate segment consists of unallocated corporate expenses and revenue eliminations.

Revenue in the broadcast industry is derived primarily from the sale of advertising time to local, national, and political and issue advertisers, retransmission fees and, to a lesser extent, from barter, digital revenue and other revenue.  Our television and radio stations are attracting new local advertisers through the creation of new local content, digital products, 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 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.  As the demand for advertising increases on the limited available inventory, we have the opportunity to increase average unit rates we charge our customers.  Even-numbered years also benefit from Olympics related advertising on our three NBC affiliates.  The expected increased ratings during the Olympics time period provide us the opportunity to sell advertising at premium rates.  Therefore, a decline in revenue during the odd-numbered years is typical and expected.

We had a retransmission agreement with Time Warner Cable Inc. (Time Warner Cable) covering television stations in three of our markets - Milwaukee, WI, Green Bay, WI and Omaha, NE and approximately 10% of our total MVPD subscribers.  This agreement expired June 30, 2013 and was subsequently extended through July 10, 2013.   Time Warner Cable dropped carriage of our multicast signals in several markets at midnight on July 10, 2013.  Our full-power television stations continued to be carried by Time Warner Cable through July 24, 2013.  Carriage by Time Warner Cable was not restored until a new agreement was reached on September 20, 2013.  Our signals continued to be broadcast over the air and carried by other MVPDs.

In recent years, newspaper industry fundamentals have declined as a result of the 2009 recession and secular industry changes.  Retail and classified run-of-press (ROP) advertising have 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 volume declines and online competition have also negatively impacted newspaper industry revenues.

Based on our results, we believe the rate of decline moderated in 2013, though advertising revenue at our publishing and broadcasting businesses reflects continued cautious behavior of both our customers and consumers.  Revenue levels in our broadcasting business will continue to be affected by increased competition for audiences.  In addition, recent consolidations within the television industry signal the importance of scale to the negotiation of both retransmission revenue with MVPDs and reverse compensation agreements with the networks.  We do not expect that revenues at our daily newspaper or community publications will return to revenue levels reported in 2012 or prior years given the secular changes affecting the newspaper industry.

We strive to grow our traditional and digital media, make capital investments in our businesses which we expect to positively impact revenue, and look for new acquisition opportunities within broadcast.  The execution of our acquisition strategy will hinge upon our ability to identify strategic candidates, negotiate definitive agreements on acceptable terms and, as necessary, secure additional financing.

Annual Broadcast License Impairment Tests

Our annual impairment test on broadcast licenses was performed at individual television and radio stations as of September 30, 2013, the first day of our fiscal fourth quarter.

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For broadcast licenses at individual television and radio stations, we used the Greenfield Method, an income approach commonly used in the broadcast sector, to estimate fair value.  This approach assumes the start up of a new station by an independent market participant, and incorporates assumptions that are based on past experience and judgments about future market performance.  These variables include, but are not limited to: the forecasted growth rate of each market (including market population, household income and retail sales), estimated market share, profit margins and operating cash flows of an independent station within a market, estimated capital expenditures and start up costs, risk-adjusted discount rate, likely media competition within the market and expected growth rates into perpetuity to estimate terminal values.  Adverse changes in significant assumptions such as an increase in discount rates, or a decrease in projected market revenues, market share or operating cash flows could result in additional non-cash impairment charges on our broadcast licenses in future periods, which could have a material impact on our financial condition and results of operations.

We based the valuation of broadcast licenses on our internal projections and industry-based assumptions:

	September 30, 2013			September 24, 2012			September 26, 2011
Television
Discount rate		11.5	%		11.5	%		11.8	%
Tax rate		39.0			39.0			39.0
Long-term growth rate		2.5			2.5			2.5
Radio
Discount rate		10.5	%		10.5	%		10.4	%
Tax rate		39.0			39.0			39.0
Long-term growth rate		2.0			2.0			2.5

As of December 29, 2013, if we were to increase the discount rates by 100.0 basis points and by 200.0 basis points, it would result in impairment charges of $0.7 million and $1.5 million, respectively.  If we were to decrease the long-term growth rates by 50.0 basis points and by 100.0 basis points, it would result in impairment charges of $0.3 million and $0.7 million, respectively.

Interim and Annual Goodwill Impairment Tests

Our annual impairment tests on goodwill associated with our broadcasting reporting unit and our combined publishing reporting unit as of September 30, 2013, the first day of our fiscal fourth quarter, indicated there was no impairment of our goodwill.

For purposes of testing the carrying values of goodwill related to our broadcasting reporting unit, we determine fair value by using an income and a market valuation approach.  The income approach uses expected cash flows of the reporting unit.  The cash flows are discounted for risk and time value.  In addition, the present value of the projected residual value is estimated and added to the present value of the cash flows.  The market approach is based on price multiples of publicly traded stocks of comparable companies to estimate fair value.  We assign a greater weight to the income approach as the market approach is deemed less reliable due to the differences in entity size and business model between our broadcasting reporting unit and the comparable companies selected.  We base our fair value estimates, in large measure, on projected financial information which we believe to be reasonable.  However, actual future results may differ from those projections, and those differences may be material.  The valuation methodology used to estimate the fair value of our reporting unit requires inputs and assumptions (i.e., market growth, operating cash flow margins and discount rates) that reflect current market conditions as well as management judgment.

We based the valuation of goodwill related to our broadcasting reporting unit on our internal projections and industry-based assumptions:

	September 30, 2013			September 24, 2012			September 26, 2011
Television
Discount rate		10.5	%		10.5	%		10.8	%
Tax rate		39.0			39.0			39.0
Long-term growth rate		2.5			2.5			2.5
Radio
Discount rate		9.0	%		9.0	%		11.0	%
Tax rate		39.0			39.0			39.0
Long-term growth rate		2.0			2.0			2.5

As of December 29, 2013, if we were to increase the discount rates by 200.0 basis points or decrease the long term growth rates by 100.0 basis points, step two of the goodwill impairment test would not be triggered.

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In 2013, we combined our community publishing and daily newspaper reporting units since we determined they had similar economic characteristics.  For purposes of testing the carrying value of goodwill related to our combined publishing reporting unit, we determine fair value using an income and a market valuation approach.  The income approach uses expected cash flows of the reporting unit.  The cash flows are discounted for risk and time value.  In addition, the present value of the projected residual value is estimated and added to the present value of the cash flows.  The market approach is based on price multiples of publicly traded stocks of comparable companies to estimate fair value.  Each approach estimated a fair value exceeding carrying value.  We assign a greater weight to the income approach as the market approach is deemed less reliable due to the differences in entity size and business model between our combined publishing reporting unit and the comparable companies selected.  We base our fair value estimates on various assumptions about our projected operating results, including continuing declines in publishing revenues as well as an expectation that we will achieve cash flow benefits from our continuing cost cutting measures.  The valuation methodology used to estimate the fair value of our reporting unit requires inputs and assumptions (i.e., market growth, operating cash flow margins and discount rates) that reflect current market conditions as well as management judgment.  These assumptions may change due to changes in market conditions and such changes may result in an impairment of our goodwill.

We based the valuation of goodwill related to our publishing reporting unit on our internal projections and industry-based assumptions:

	September 30, 2013			(1)	September 24, 2012			September 26, 2011
Discount rate		12.0	%			12.0	%		13.5	%
Tax rate		39.0				39.0			39.0
Long-term growth rate		(1.5	)			(1.5	)		-

(1) In 2013, we combined our community publishing and daily newspaper reporting units.

As of December 29, 2013, if we were to increase the discount rates by 200.0 basis points or decrease the long-term growth rates by 100.0 basis points, step two of the goodwill impairment test would not be triggered.

Results of Operations

2013 (52 weeks) Compared to 2012 (53 weeks)

Results include the operations of the NewsChannel 5 Network, LLC, television station whose assets were acquired on December 6, 2012. Also, 2013 contained 52 weeks compared to 53 weeks in 2012. We estimate the revenue impact to be $6.0 million and the operating earnings impact to be $1.2 million.

Our consolidated revenue in 2013 was $397.3 million, an increase of $4.2 million, or 1.1%, compared to $393.1 million in 2012.  Our consolidated operating costs and expenses in 2013 were $219.3 million, an increase of $14.0 million, or 6.8%, compared to $205.3 million in 2012.  Our consolidated selling and administrative expenses in 2013 were $126.7 million, a decrease of $2.4 million, or 8.2%, compared to $129.1 million in 2012.  We recorded a $1.6 million non-cash broadcast license impairment charge in 2012.

The following table presents our total revenue by segment, total operating costs and expenses, selling and administrative expenses, broadcast license impairment and total operating earnings as a percent of total revenue for 2013 and 2012:

				Percent of						Percent of
				Total						Total
	2013			Revenue			2012			Revenue
	(dollars in millions)
Revenue:
Broadcasting	$	243.4			61.3	%	$	228.7			58.2	%
Publishing		154.6			38.9			164.9			41.9
Corporate		(0.7	)		(0.2	)		(0.5	)		(0.1	)
Total revenue		397.3			100.0			393.1			100.0
Total operating costs and expenses		219.3			55.2			205.3			52.2
Selling and administrative expense		126.7			31.9			129.1			32.8
Total operating costs and expenses and selling and administrative expenses		346.0			87.1			334.4			85.0
Total operating earnings	$	51.3			12.9	%	$	58.7			14.9	%

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At our broadcasting businesses, advertising revenue increased in 2013 compared to 2012 primarily due to a $30.5 million increase in local advertising revenue, a $11.7 million decrease in retransmission revenue; $9.0 million increase in national revenue, partially offset by a $34.1 million decrease in political and issue advertising revenue, $2.3 million decrease in Olympics advertising revenue, and a $0.1 million decrease in other advertising revenue.

Our publishing businesses experienced an 8.7% decrease in retail advertising revenue in 2013 compared to 2012.  Adjusting for the sale of the northern Wisconsin publications in December 2012 and the extra week, retail advertising revenue increased 0.5%.  Classified advertising revenue decreased 11.4% in 2013 compared to 2012 primarily due to the sale of the northern Wisconsin publications, the extra week, and lower employment advertising.  Publishing circulation revenue decreased $2.9 million in 2013 compared to 2012 driven by lower volume and the extra week.  Publishing other revenue, which primarily includes commercial printing and delivery revenue increased $1.2 million or 5.4% in 2013 compared to 2012, driven by increased commercial printing volume which offset commercial delivery declines.

The increase in total operating costs and expenses in 2013 compared to 2012 was primarily due to costs related to the NewsChannel 5 Network, LLC acquisition in December 2012, increased employee-related expenses and network affiliation fees, partially offset by a decrease in newsprint and paper costs. The decrease in selling and administrative expenses was primarily due to lower acquisition and integration-related costs, impairment expenses, publishing workforce reduction charges and the extra week.

Our consolidated operating earnings were $51.3 million in 2013, a decrease of $7.4 million, or 12.6%, compared to $58.7 million in 2012.  The following table presents our operating earnings (loss) by segment for 2013 and 2012:

	2013			2012
	(dollars in millions)
Broadcasting	$	45.4		$	54.9
Publishing		13.8			11.6
Corporate		(7.9	)		(7.8	)
Total operating earnings	$	51.3		$	58.7

The decrease in total operating earnings was primarily due to the decrease in political and Olympics revenue, partially off-set by the acquisition of NewsChannel 5 Network, LLC in Nashville, Tennessee in December 2012 and increased retransmission revenue, net of related expenses.

EBITDA in 2013 was $74.2 million, a decrease of $6.5 million, or 8.1%, compared to $80.8 million in 2012. We define EBITDA as net earnings excluding provision for income taxes, total other expense, net (which is 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 2013 and 2012:

	2013		2012
	(dollars in millions)
Net earnings(1)	$	26.3	$	32.6
Provision for income taxes		17.2		21.7
Total other expense, net		7.9		4.5
Depreciation		20.0		20.6
Amortization		2.8		1.4
EBITDA	$	74.2	$	80.8

(1) Included in net earnings for 2013 are pre-tax charges for impairment of long-lived assets, acquisition and integration related costs, and workforce reduction charges of $0.2 million, $1.6 million, and $0.9 million, respectively.  Included in net earnings for 2012 are pre-tax charges for impairment of long-lived assets, impairment of intangible assets, acquisition and integration related costs, and workforce reduction charges of $0.5 million, $1.6 million, $3.1 million, and $1.7 million, respectively.

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

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Broadcasting

Revenue from broadcasting in 2013 was $243.4 million, an increase of $14.7 million, or 6.4%, compared to $228.7 million in 2012.  Operating earnings from broadcasting in 2013 were $45.4 million, a decrease of $9.5 million, or 17.3%, compared to $54.9 million in 2012.  We recorded a $1.6 million non-cash broadcast license impairment charge in 2012.

The following table presents our broadcasting revenue and operating earnings for 2013 and 2012:

	2013						2012						Percent
	Television		Radio		Total		Television		Radio		Total		Change
	(dollars in millions)
Revenue	$	166.6	$	76.8	$	243.4	$	152.5	$	76.2	$	228.7		6.4	%
Operating earnings	$	31.4	$	14.0	$	45.4	$	41.0	$	13.9	$	54.9		(17.3	)%

Revenue from our television stations in 2013 was $166.6 million, an increase of $14.1 million, or 9.2%, compared to $152.5 million in 2012.  We experienced revenue increases in two of our nine television markets.  Compared to 2012, on a same station basis excluding Nashville NewsChannel 5 Network, LLC., political and issue advertising revenue decreased $32.9 million, or 96.8%; and national advertising revenue increased $0.9 million, or 3.4%; retransmission revenue increased $6.4 million, or 62.7%; local advertising revenue increased $1.8 million, or 2.4%; other revenue decreased $1.0 million, or 38.9%; and Olympics revenue decreased $2.3 million.  Political and issue advertising revenue decreased in 2013 compared to 2012 primarily due to 2013 being a non-election 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.

Our television stations experienced revenue increases in a number of categories, specifically entertainment, automotive, media and packaged goods, partially offset by decreases in the pharmaceuticals, travel and political categories.  Automotive advertising revenue represented 21.6% of television advertising revenue in 2013 compared to 15.9% in 2012.  Automotive advertising revenue was $37.2 million in 2013, an increase of $11.9 million, or 49.9%, compared to $25.4 million in 2012.  Our television stations are working to grow their local customer base by creating new local content and programs that combine television with digital platforms.  Digital revenue was $3.7 million in 2013 compared to $2.1 million in 2012.  Digital revenue is reported in local advertising revenue.

Operating earnings from our television stations in 2013 were $31.4 million, a decrease of $9.6 million, or 23.4%, compared to $41.0 million in 2012.  The decrease in operating earnings was primarily due to lower political and Olympics revenue partially offset by operating earnings of NewsChannel 5 Network, LLC.  Total television expenses in 2013 increased $24.0 million, or 21.5%, compared to 2012 primarily due to the acquisition of NewsChannel 5 Network, LLC, an increase in employee-related expenses, sales commissions, network programming expenses, acquisition and integration-related costs, and expenses related to the new Green Bay Packers preseason network agreement.  Throughout 2013, we selectively added back expense to invest in our employees, programming, and promotion of our products.

Revenue from our radio stations in 2013 was $76.8 million, an increase of $0.6 million, or 0.7%, compared to $76.2 million in 2012.  We experienced revenue increases in three of our eight radio markets.  Compared to 2012, local advertising revenue increased $1.7 million, or 2.7%; political and issue advertising revenue decreased $1.3 million, or 79.1%; other advertising revenue increased $0.8 million, or 30.2%; and national advertising revenue decreased $0.7 million, or 9.3%.

Our radio stations experienced revenue increases in a number of categories, specifically retail, medical and packaged goods, partially offset by decreases in the automotive, political, media and communications categories.  Automotive advertising represented 14.7% of radio advertising revenue in 2013 compared to 15.3% in 2012.  Automotive advertising revenue was $11.3 million in 2013, a decrease of $0.3 million, or 2.8%, compared to $11.6 million in 2012.  Our radio stations are working to grow their local customer base by creating new local content and programs that combine radio with digital platforms.  Digital revenue was $2.7 million in 2013 compared to $2.2 million in 2012.  Digital revenue is reported in local advertising revenue.

Operating earnings from our radio stations in 2013 were $14.0 million, an increase of $0.1 million, or 0.4%, compared to $13.9 million in 2012.  The increase in operating earnings was primarily due to an increase in total revenue.  Total radio expenses increased $0.5 million, or 0.8%, in 2013 compared to 2012 primarily due to credits received in 2012 related to our radio music license fees, increases in employee-related expenses, partially offset by impairment charges and acquisitions and integration related expenses recorded in 2012.  Throughout 2013, we selectively added back expense to invest in our employees, programming, and promotion of our products.

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Publishing

Revenue from publishing in 2013 was $154.5 million, a decrease of $10.4 million, or 6.3%, compared to $164.9 million in 2012.  Operating earnings from publishing were $13.8 million in 2013, an increase of $2.2 million, or 18.6%, compared to $11.6 million in 2012.

The following table presents our publishing revenue by category and operating earnings for 2013 and 2012:

	2013									2012
	Daily			Community						Daily			Community						Percent
	Newspaper			Publications			Total			Newspaper			Publications			Total			Change
	(dollars in millions)
Advertising revenue:
Retail		$	57.9		$	6.2		$	64.1		$	56.6		$	13.5		$	70.1		(8.7	)%
Classified			12.9			1.8			14.7			14.0			2.7			16.7		(11.4	)
National			2.7			-			2.7			3.3			-			3.3		(18.7	)
Total advertising revenue			73.5			8.0			81.5			74.0			16.2			90.2		(9.6	)
Circulation revenue			48.8			1.3			50.1			51.2			1.8			53.0		(5.5	)
Other revenue			17.7			5.2			22.9			18.3			3.4			21.7		5.4
Total revenue		$	140.0		$	14.5		$	154.5		$	143.5		$	21.4		$	164.9		(6.3	)%
Operating earnings		$	12.8		$	1.0		$	13.8		$	11.0		$	0.6		$	11.6		18.6	%

Advertising revenue accounted for 52.7% of total publishing revenue in 2013 compared to 54.7% in 2012.  The ongoing secular changes in the newspaper industry and the current economic environment have caused advertisers to decrease their advertising spending.  In addition, due to the changing mix of revenue categories, changes in frequency and placement of advertising in the newspaper and planned competitive advertising rate decreases in order to increase volume, we continued to see decreases in the average rate per inch of advertising in 2013.

Retail advertising revenue in 2013 was $64.1 million, a decrease of $6.0 million, or 8.6%, compared to $70.1 million in 2012.  The $1.3 million increase in retail advertising revenue at our daily newspaper was primarily due to several new large customers.  We continue to 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.  These trends persisted in our community publications business.  The $7.3 million decrease in retail advertising revenue at our community publications was primarily due to the sale of our northern Wisconsin publications in December 2012.

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 2013 compared to 2012.  Classified advertising revenue in 2013 was $14.7 million, a decrease of $2.0 million, or 11.4%, compared to $16.7 million in 2012 due to lower employment and automotive advertising.

The total decrease in retail and classified automotive advertising revenue at our daily newspaper in 2013 was $0.2 million, or 2.0%, primarily due to a decrease in classified digital advertising revenue.

Total retail and classified digital advertising revenue at our daily newspaper was $12.8 million in 2013, an increase of $0.5 million, or 3.7%, compared to $12.3 million in 2012.  Digital retail advertising revenue increased 10.2% compared to 2012 due to increases in sponsorships and other digital revenue.  Digital classified advertising revenue decreased 12.4% compared to 2012 due to decreases in classified upsells and packages sold.  Digital advertising revenue is reported in the retail and classified advertising revenue categories.

National advertising revenue was $2.7 million in 2013, a decrease of $0.6 million, or 18.7%, compared to $3.3 million in 2012.  The decrease was primarily due to a decrease in ROP advertising in the communications and finance and insurance categories.

Circulation revenue accounted for 32.4% of total publishing revenue in 2013 compared to 32.2% in 2012.  Circulation revenue was $50.1 million in 2013, a decrease of $2.9 million, or 5.5%, compared to $53.0 million in 2012 due to declines in circulation volumes that offset price increases.

Other revenue, which consists of revenue from commercial printing, commercial distribution and promotional revenue, accounted for 14.9% of total publishing revenue in 2013 compared to 13.2% in 2012.  Other revenue was $22.9 million in 2013, an increase of $1.2 million, or 5.4%, compared to $21.7 million in 2012.  The increase was primarily due to increased commercial printing revenue, partially offset by a $0.6 million decline in commercial delivery revenue.

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Publishing operating earnings in 2013 were $13.8 million, an increase of $2.2 million, or 18.6%, compared to $11.6 million in 2012.  The increase in operating earnings was primarily due to decreased employee-related costs and depreciation expense.  Total expenses decreased $12.7 million in 2013 as compared to 2012, primarily due to $7.7 million in expense savings from the sale of the northern Wisconsin community publications in December 2012, combined with $1.0 million in savings at the daily newspaper in employee costs, materials and depreciation.  Total newsprint and paper costs for our publishing businesses were $15.5 million in 2013 compared to $16.9 million in 2012.  There was a 7.1% decrease in newsprint consumption and a 2.6% decrease in average newsprint and paper pricing per metric ton.

Corporate

The corporate segment reflects the unallocated costs of our corporate executive management, as well as expenses related to corporate governance.  Revenue and expense eliminations were $0.7 million in 2013 compared to $0.5 million in 2012.  The unallocated expenses were $7.9 million in both 2013 and 2012.

Other Income and Expense and Taxes

Interest income was minimal in 2013 and 2012.  Interest expense was $7.7 million in 2013 compared to $4.5 million in 2012.  The increase in interest expense was due to the increase in long-term notes payable to banks resulting from our acquisition of NewsChannel 5 Network, LLC and the interest on the unsecured promissory notes issued during the third quarter of 2012 in connection with our repurchase of all outstanding class C shares.   Amortization of deferred financing costs, which is reported in interest expense, was $1.0 million in 2013, a decrease of $0.8 million, compared to $1.8 million in 2012.

Our effective tax rate was 39.6% in 2013 compared to 40.0% in 2012.

Discontinued Operations

Earnings from discontinued operations, net of income tax expense, were minimal in 2013 compared to $0.8 million in 2012.  Income tax expense was $0.1 in 2013 compared to $0.5 million in 2012.

During 2013, we agreed to the sale of stations KMIR-TV and My 13 KPSE-TV in Palm Springs, California to OTA Broadcasting, LLC, an affiliate of Virginia based OTA Broadcasting, LLC for $17.0 million in cash and certain other contingent considerations.  We closed on the sale effective January 1, 2014 and expect to record a pre-tax book gain of $10.2 million in the first quarter of 2014.  In 2013, revenue from KMIR-TV and My 13 KPSE-TV was $5.5 million and we recorded $0.1 million in net earnings from operations.

Net Earnings

Our net earnings in 2013 were $26.2 million, a decrease of $7.1 million, or 21.3%, compared to $33.3 million in 2012.  The decrease was due to a decrease in political and Olympics revenue which offset earnings of the NewsChannel 5 Network, LLC acquisition in December 2012, an increase in interest expense and an increase in operating costs at our broadcast business.

Earnings per Share for Class A and B Common Stock

In 2013, basic and diluted net earnings per share of class A and B common stock were $0.52 for both.  This compared to $0.61 for both in 2012.  Basic and diluted earnings per share of class A and B common stock from continuing operations were $0.52 for both in 2013.  This compared to $0.60 for both in 2012.  There were no basic and diluted earnings per share from discontinued operations in 2013. Basic and diluted earnings per share of class A and B common stock from discontinued operations were $0.01 for both in 2012.

2012 (53 weeks) Compared to 2011 (52 weeks)

The 2012 results include the operations of a television station whose assets were acquired on December 6, 2012. Also, 2012 contained 53 weeks compared to 52 weeks in 2011.  Although it is difficult to precisely quantify the impact of the additional week, we estimate the revenue impact to be $6.0 million and the operating earnings impact to be $1.2 million.

Our consolidated revenue in 2012 was $393.1 million, an increase of $41.6 million, or 11.8%, compared to $351.5 million in 2011.  Our consolidated operating costs and expenses in 2012 were $205.3 million, an increase of $6.6 million, or 3.3%, compared to $198.7 million in 2011.  Our consolidated selling and administrative expenses in 2012 were $127.4 million, an increase of $15.0 million, or 13.3%, compared to $112.4 million in 2011.  We recorded a $1.6 million non-cash broadcast license impairment charge in 2012 and a $0.7 million non-cash broadcast license impairment charge in 2011.

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The following table presents our total revenue by segment, total operating costs and expenses, selling and administrative expenses, broadcast license impairment and total operating earnings as a percent of total revenue for 2012 and 2011:

				Percent of						Percent of
				Total						Total
	2012			Revenue			2011			Revenue
	(dollars in millions)
Revenue:
Broadcasting	$	228.7			58.2	%	$	180.8			51.4	%
Publishing		164.9			41.9			171.0			48.7
Corporate		(0.5	)		(0.1	)		(0.3	)		(0.1	)
Total revenue		393.1			100.0			351.5			100.0
Total operating costs and expenses		205.3			52.2			198.7			56.5
Selling and administrative expense		127.5			32.4			112.6			32.0
Broadcast License Impairment		1.6			0.4			0.7			0.3
Total operating costs and expenses and selling and administrative expenses		334.4			85.0			312.0			88.8
Total operating earnings	$	58.7			14.9	%	$	39.5			11.2	%

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At our broadcasting businesses, advertising revenue increased in 2012 compared to 2011 primarily due to a $31.6 million increase in political and issue advertising revenue, a $6.8 million increase in local advertising revenue, a $5.4 million increase in national advertising revenue, a $2.7 million increase in Olympics advertising revenue, a $2.3 million increase in retransmission revenue, and a $0.7 million increase in other revenue.  Automotive advertising increased $6.8 million in 2012 compared to 2011.

Our publishing businesses experienced a 5.2% decrease in retail advertising revenue in 2012 compared to 2011.  The retail advertising revenue decrease was a result of decreases in the department store, telecommunications, and building categories and as a result of the sale of the Florida-based community publications in 2011, partially offset by the increase in retail ROP from special programs and initiatives.  Classified advertising revenue decreased 17.2% in 2012 compared to 2011 primarily due to decreases in the automotive and employment categories, combined with the year-over-year decline from the sale of the Florida-based community publications in 2011.  Partially offsetting these revenue decreases was a 2.7% increase in circulation revenue and a 9.8% increase in commercial printing at our daily newspaper in 2012 compared to 2011. Circulation revenue increased $1.3 million in 2012 compared to 2011.  At our daily newspaper, commercial delivery revenue decreased in 2012 by $0.1 million compared to 2011. Commercial printing revenue at our daily newspapers increased $0.9 million in 2012 compared to 2011, driven by increased volume and one large new customer.

The increase in total operating costs and expenses in 2012 compared to 2011 was primarily due to increases in employee-related expenses and network affiliation fees, partially offset by a decrease in newsprint and paper costs. The increase in selling and administrative expenses was primarily due to employee-related expenses, acquisition and integration-related costs, impairment of broadcast licenses, impairment of long-lived assets and workforce reduction charges primarily in our publishing group.

Our consolidated operating earnings were $58.7 million in 2012, an increase of $19.2 million, or 48.6%, compared to $39.5 million in 2011.  The following table presents our operating earnings (loss) by segment for 2012 and 2011:

	2012			2011
	(dollars in millions)
Broadcasting	$	54.9		$	30.7
Publishing		11.6			15.9
Corporate		(7.8	)		(7.1	)
Total operating earnings	$	58.7		$	39.5

The increase in total operating earnings was primarily due to the increase in revenue at our broadcasting business, partially offset by the decrease in revenue at our publishing business, an increase in operating costs and expenses and selling and administrative expenses, and an increase in non-cash broadcast license impairment charges.

EBITDA in 2012 was $80.8 million, an increase of $18.6 million, or 29.9%, compared to $62.2 million in 2011.

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The following table presents a reconciliation of our consolidated net earnings to EBITDA for 2012 and 2011:

	2012		2011
	(dollars in millions)
Net earnings(1)	$	32.6	$	21.7
Provision for income taxes		21.7		14.3
Total other expense, net		4.5		3.5
Depreciation		20.6		21.3
Amortization		1.4		1.4
EBITDA	$	80.8	$	62.2

(1) Included in net earnings for 2012 are pre-tax charges for impairment of long-lived assets, impairment of intangible assets, acquisition and integration related costs, and workforce reduction charges of $0.5 million, $1.6 million, $3.1 million, and $1.7 million, respectively.  Included in net earnings 2011 are pre-tax charges of for impairment of intangible assets and workforce reductions charges of $0.7 million and $1.7 million, respectively, and $0.6 million pre-tax operating earnings related to the sold Florida-based community publications.

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

Broadcasting

Revenue from broadcasting in 2012 was $228.7 million, an increase of $48.0 million, or 26.6%, compared to $180.7 million in 2011.  Operating earnings from broadcasting in 2012 were $54.9 million, an increase of $24.1 million, or 78.2%, compared to $30.8 million in 2011.  We recorded a $1.6 million non-cash broadcast license impairment charge in 2012 and a $0.7 million non-cash broadcast license impairment charge in 2011.

The following table presents our broadcasting revenue and operating earnings for 2012 and 2011:

	2012						2011						Percent
	Television		Radio		Total		Television		Radio		Total		Change
	(dollars in millions)
Revenue	$	152.5	$	76.2	$	228.7	$	110.3	$	70.4	$	180.7		26.6	%
Operating earnings	$	41.0	$	13.9	$	54.9	$	15.7	$	15.1	$	30.8		78.2	%

Revenue from our television stations in 2012 was $152.5 million, an increase of $42.2 million, or 38.3%, compared to $110.3 million in 2011.  We experienced revenue increases in all of our nine existing television markets.  Compared to 2011, political and issue advertising revenue increased $30.7 million, or 750.7%; and national advertising revenue increased $5.0 million, or 22.3%; retransmission revenue increased $2.3 million, or 27.4%; local advertising revenue increased $2.2 million, or 2.8%; other revenue increased $0.8 million, or 42.8%; and Olympics revenue increased $2.7 million.  Political and issue advertising revenue increased in 2012 compared to 2011 primarily due to the political activity in Wisconsin and Nevada.  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.

Our television stations experienced revenue increases in a number of categories, specifically political, automotive, media and financial, partially offset by decreases in the home products, supermarkets and communications retail categories.  Automotive advertising revenue represented 15.9% of television advertising revenue in 2012 compared to 17.4% in 2011.  Automotive advertising revenue was $25.4 million in 2012, an increase of $5.3 million, or 26.2%, compared to $20.1 million in 2011. Digital revenue was $2.1 million in 2012 compared to $1.9 million in 2011.  Digital revenue is reported in local advertising revenue.

Operating earnings from our television stations in 2012 were $41.0 million, an increase of $25.3 million, or 161.1%, compared to $15.7 million in 2011.  The increase in operating earnings was primarily due to the impact from the increase in advertising revenue.  Total television expenses in 2012 increased $17.3 million, or 17.4%, compared to 2011 primarily due to an increase in employee-related expenses, sales commissions, network programming expenses, acquisition and integration-related costs, and expenses related to the new Green Bay Packers preseason network agreement.  Throughout 2012, we selectively added back expense to invest in our employees, programming, and promotion of our products.

Revenue from our radio stations in 2012 was $76.2 million, an increase of $5.8 million, or 8.4%, compared to $70.4 million in 2011.  We experienced revenue increases in seven of our eight radio markets.  Compared to 2011, local advertising revenue increased $4.5 million, or 7.6%; political and issue advertising revenue increased $0.9 million, or 116.3%; and national advertising revenue increased $0.4 million, or 6.4%.

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Our radio stations experienced revenue increases in a number of categories, specifically automotive, political, casino and gambling, retail and entertainment, partially offset by decreases in the medical, media, building and hardware, and communications categories.  Automotive advertising represented 15.3% of radio advertising revenue in 2012 compared to 14.4% in 2011.  Automotive advertising revenue was $11.6 million in 2012, an increase of $1.5 million, or 14.8%, compared to $10.1 million in 2011. Digital revenue was $2.2 million in 2012 compared to $1.8 million in 2011.  Digital revenue is reported in local advertising revenue.

Operating earnings from our radio stations in 2012 were $13.9 million, a decrease of $1.2 million, or 7.3%, compared to $15.1 million in 2011.  The decrease in operating earnings was primarily due to an increase in total expenses.  Total radio expenses increased $7.0 million, or 12.6%, in 2012 compared to 2011 primarily due to increases in employee-related expenses, impairment of broadcast licenses, impairment of long-lived assets, and acquisition and integration-related expenses, partially offset by credits related to our radio music license fees.  Throughout 2012, we selectively added back expense to invest in our employees, programming, and promotion of our products.

Publishing

Revenue from publishing in 2012 was $164.9 million, a decrease of $6.1 million, or 3.5%, compared to $171.0 million in 2011.  Operating earnings from publishing were $11.6 million in 2012, a decrease of $4.3 million, or 26.9%, compared to $15.9 million in 2011.

The following table presents our publishing revenue by category and operating earnings for 2012 and 2011:

	2012						2011
	Daily		Community				Daily		Community				Percent
	Newspaper		Publications		Total		Newspaper		Publications		Total		Change
	(dollars in millions)
Advertising revenue:
Retail	$	56.6	$	13.5	$	70.1	$	56.7	$	17.2	$	73.9		(5.2	)%
Classified		14.0		2.7		16.7		16.8		3.4		20.2		(17.2	)
National		3.3		-		3.3		4.5		-		4.5		(25.5	)
Direct Marketing		0.1		-		0.1		0.1		-		0.1		(56.0	)
Total advertising revenue		74.0		16.2		90.2		78.1		20.6		98.6		(8.7	)
Circulation revenue		51.2		1.8		53.0		49.9		1.8		51.7		2.7
Other revenue		18.3		3.4		21.7		17.4		3.2		20.6		5.5
Total revenue	$	143.5	$	21.4	$	164.9	$	145.4	$	25.6	$	170.9		(3.5	)%
Operating earnings	$	11.0	$	0.6	$	11.6	$	14.3	$	1.6	$	15.9		(26.9	)%

Advertising revenue accounted for 54.7% of total publishing revenue in 2012 compared to 57.7% in 2011.  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, changes in 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 2012.

Retail advertising revenue in 2012 was $70.1 million, a decrease of $3.8 million, or 5.2%, compared to $73.9 million in 2011.  The $0.1 million decrease in retail advertising revenue at our daily newspaper was primarily due to a decrease in preprint advertising at the daily newspaper from the department store, telecommunications, and building categories, partially offset by the increase in digital retail.  We continue to 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.  These trends persisted in our community publications business.  The $3.7 million decrease in retail advertising revenue at our community publications business was primarily due to revenue decreases as a result of the sale of the Florida-based publications in 2011 and, to a lesser extent, the sale of our northern Wisconsin community publications in the fourth quarter of 2012.  The sale of the Florida-based community publications accounted for $2.8 million of the year-over-year decline.

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 2012 compared to 2011.  Classified advertising revenue in 2012 was $16.7 million, a decrease of $3.5 million, or 17.2%, compared to $20.2 million in 2011.  At our daily newspaper, classified advertising revenue decreased $2.8 million, or 16.5%, in 2012 compared to 2011.  The revenue decreases were led by the employment and automotive categories, which in the aggregate decreased $2.2 million, or 25.8%. At our community publications business, classified advertising revenue decreased $0.7 million, or 20.8%, in 2012 compared to 2011 primarily due to continued softness in the classified categories and decreases as a result of the sale of the Florida-based community publications businesses in the second and third quarters of 2011, and, to a lesser extent, the sale of our northern Wisconsin community publications in the fourth quarter of 2012.

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The total decrease in retail and classified automotive advertising revenue at our daily newspaper in 2012 was $0.6 million, or 13.5%, compared to 2011 primarily due to a decrease in classified ROP advertising revenue, partially offset by an increase in retail ROP advertising revenue.

Total retail and classified digital advertising revenue at our daily newspaper was $12.3 million in 2012, an increase of $1.0 million, or 9.3%, compared to $11.3 million in 2012.  Digital retail advertising revenue increased 26.1% compared to 2011 due to increases in sponsorships and other digital revenue.  Digital classified advertising revenue decreased 17.7% compared to 2011 due to decreases in classified upsells and packages sold.  Digital advertising revenue is reported in the retail and classified advertising revenue categories.

National advertising revenue was $3.3 million in 2012, a decrease of $1.2 million, or 25.5%, compared to $4.5 million in 2011.  The decrease was primarily due to a decrease in ROP and preprint advertising in the furniture and business services categories.

Circulation revenue accounted for 32.2% of total publishing revenue in 2012 compared to 30.2% in 2011.  Circulation revenue was $53.0 million in 2012, an increase of $1.3 million, or 2.7%, compared to $51.7 million in 2011.  At our daily newspaper, circulation revenue increased $1.3 million, or 2.7%, primarily due to a price increase implemented with our “JS Everywhere” subscription program, partially offset by comparisons to 2011 when the Green Bay Packers were in the Super Bowl and we experienced increased single copy sales.  The JS Everywhere program provides newspaper and digital subscribers access to the new iPad app, mobile phone app and access to jsonline.com.  At our community business, circulation revenue remained consistent at $1.8 million in 2012 and 2011.

Other revenue, which consists of revenue from commercial printing, commercial distribution and promotional revenue at our daily newspaper and commercial printing at the printing plant of our community publications, accounted for 13.2% of total publishing revenue in 2012 compared to 12.1% in 2011.  Other revenue was $21.7 million in 2012, an increase of $1.1 million, or 5.5%, compared to $20.6 million in 2011.  The $0.9 million increase at our daily newspaper was primarily due to an increase in commercial printing revenue driven by increased volume and one large new customer.  At our community publications business, other revenue was $3.4 million in 2012, an increase of $0.2 million, or 7.0%, compared to $3.2 million in 2011.

Publishing operating earnings in 2012 were $11.6 million, a decrease of $4.3 million, or 26.9%, compared to $15.9 million in 2011.  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 $1.8 million, or 1.1%, in 2012 compared to 2011, primarily due to a decrease in employee related costs and a decrease in costs due to revenue declines.  Total newsprint and paper costs for our publishing businesses in 2012 were $16.9 million, an increase of $0.1 million, or 0.6%, compared to $16.8 million in 2011 due to a 0.4% increase in average newsprint pricing per metric ton, partially offset by a 0.2% decrease in newsprint consumption.

Corporate

The corporate segment reflects the unallocated costs of our corporate executive management, as well as expenses related to corporate governance.  Revenue and expense eliminations were $0.5 million in 2012 compared to $0.3 million in 2011.  The unallocated expenses were $7.8 million in 2012, an increase of $0.7 million compared to $7.1 million in 2011.  The increase was primarily due to an increase in our executive incentive compensation expense.

Other Income and Expense and Taxes

Interest income was minimal in 2012 and 2011.  Interest expense was $4.5 million in 2012 compared to $3.6 million in 2011.  The increase in interest expense was due to the interest on the unsecured promissory notes issued during the third quarter of 2012 in connection with our repurchase of all outstanding class C shares, and the increase in long-term notes payable to banks resulting from our acquisition of NewsChannel5 Network, LLC in Nashville, Tennessee. Amortization of deferred financing costs, which is reported in interest expense, was $1.8 million in 2012, an increase of $0.7 million, compared to $1.1 million in 2011.

Our effective tax rate was 40.0% in 2012 compared to 39.7% in 2011.

Discontinued Operations

Earnings from discontinued operations, net of income tax expense, were $0.8 in 2012 compared to $0.2 million in 2011.  Income tax expense was $0.5 in 2012 compared to $0.1 million in 2011.

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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.

Net Earnings

Our net earnings in 2012 were $33.3 million, an increase of $11.2 million, or 50.2%, compared to $22.1 million in 2011.  The increase was due to the increase in operating earnings from continuing operations for the reasons described above, partially offset by the increase in interest expense and increase in the provision for income taxes.

Earnings per Share for Class A and B Common Stock

In 2012, basic and diluted net earnings per share of class A and B common stock were $0.61 for both.  This compared to $0.36 for both in 2011.  Basic and diluted earnings per share of class A and B common stock from discontinued operations were $0.01 for both in 2012.  Basic and diluted earnings per share of class A and B common stock from discontinued operations were $0.01 for both in 2011.

Liquidity and Capital Resources

Our cash balance was $1.9 million as of December 29, 2013.  We believe our expected cash flows from operations and additional borrowings available under our senior secured credit facilities of $143.8 million as of December 29, 2013 will meet our current needs.  In connection with the acquisition of NewsChannel 5 Network, LLC, we amended the credit agreement to permit the acquisition and increase the total borrowing capacity to an initial $350.0 million.  During 2013, we decreased our notes payable to banks by $35.1 million. We expect to continue to pay down our notes payable to banks, selectively invest resources in broadcast acquisitions, digital initiatives, our brands, employees, programming, products and capital projects while remaining in compliance with our debt covenants, and repurchase shares opportunistically.

Long-term Notes Payable to Banks

We have senior secured credit facilities consisting of a secured term loan facility and a secured revolving credit facility.  Under these facilities, we have initial aggregate commitments of $350.0 million, including the term loan commitment of $150.0 million and the revolving credit facility commitment of $200.0 million, both of which mature on December 5, 2017.  As of December 29, 2013, the outstanding principal amount of revolving loans drawn under the credit agreement was $56.2 million, and the outstanding principal amount of term loans drawn under the credit agreement was $138.8 million.  The proceeds of the senior secured credit facilities were used for the acquisition of NewsChannel 5 Network, LLC and general corporate purposes.  Amounts under the secured revolving credit facility may be borrowed, repaid and reborrowed by us from time to time until the maturity date of the revolving loan facility.  Voluntary prepayments and commitment reductions are permitted at any time without fee upon proper notice and subject to a minimum dollar requirement.  Voluntary prepayments of the secured term loan facility represent a permanent reduction in credit available.  At our option, the commitments under the credit agreement may be increased from time to time by an aggregate amount not to exceed $100.0 million.  The increase option is subject to the satisfaction of certain conditions, including, without limitation, the identification of lenders (which may include existing lenders or new lenders) willing to provide the additional commitments.

Our borrowings under the credit agreement incur interest at either (a) LIBOR plus a margin that ranges from 150.0 basis points to 250.0 basis points, depending on our net debt ratio, or (b) (i) the base rate, which equals the highest of the prime rate set by U.S. Bank National Association, the Federal Funds Rate plus 50.0 basis points or one-month LIBOR plus 100.0 basis points, plus (ii) a margin that ranges from 50.0 basis points to 150.0 basis points, depending on our net debt ratio.  The initial pricing spread above LIBOR was 225.0 basis points.

Our obligations under the credit agreement are currently guaranteed by each of our subsidiaries.  Subject to certain exceptions, the credit agreement is secured by liens on certain of our assets 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 the payment of dividends.

As of December 29, 2013, we were in compliance with the financial covenants of the secured credit facility. 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 3.75-to-1, as of the end of each fiscal quarter, as determined for the four fiscal quarters then ended.  This ratio compares, as of the date of determination, our consolidated funded debt on such date to consolidated EBITDA, defined in the credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals, non-cash charges and certain other adjustments.  As of December 29, 2013, our consolidated funded debt ratio was 2.67-to-1.

· A minimum interest coverage ratio of not less than 3-to-1, as of the end of each fiscal quarter, as determined for the four fiscal quarters then ended.  This ratio compares, for any period, our consolidated EBITDA, defined in the credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals, non-cash charges and certain other adjustments.  As of December 29, 2013, our interest coverage ratio was 10.11-to-1.

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As of December 29, 2013 and December 30, 2012, we had borrowings of $195.0 million and $230.1 million, respectively, under our credit facility at a currently effective blended interest rate of 2.23% and 2.53%, respectively.  Remaining unamortized fees in connection with the credit facility of $3.8 million are being amortized over the term of the secured credit facility using the straight-line method.

We estimate the fair value of our senior secured credit facilities at December 29, 2013 to be $187.5 million, based on discounted cash flows using an interest rate of 3.36%.  We estimated the fair value of our secured credit facility at December 30, 2012 to be $224.8 million, based on discounted cash flows using an interest rate of 3.08%.  Interest rates utilized are estimated based on observed market rates of interest for debt with similar maturities and seniority.  These fair value measurements fall within Level 2 of the fair value hierarchy.

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.

Unsecured Subordinated Notes Payable

On August 13, 2012, we repurchased all 3.3 million outstanding shares of our class C common stock, including all rights associated with such shares of class C common stock, in exchange for $6.2 million in cash and the issuance of 15 unsecured subordinated promissory notes with an aggregate principal amount of $25.6 million and bearing interest at a rate of 7.25% per annum.

Seven of the notes with an aggregate principal amount of $9.7 million were paid in 2012.  A scheduled minimum principal payment of $2.7 million was made on September 30, 2013.  The remaining eight subordinated notes, with an aggregate remaining principal amount of approximately $13.3 million, are payable in equal annual installments on September 30 of each of 2014, 2015, 2016, 2017 and 2018, with no prepayment right.  Interest on the notes is payable quarterly.

We estimate the fair value of the subordinated notes to be $13.5 million based on discounted cash flows using an interest rate of 7.17%, which falls within Level 2 of the fair value hierarchy.  Interest rates utilized are estimated based on observed market rates of interest for debt with similar maturities and seniority.

We have $1.9 million of standby letters of credit for business insurance purposes.

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Workforce Reductions and Business Improvements

Our liability for separation benefits of $0.4 million as of December 29, 2013 will be paid during the next year.  The ongoing activity of our liability for separation benefits during the years ended December 29, 2013 and December 30, 2012 were as follows:

			Charge for		Payments for
	Balance as of		Separation		Separation			Balance as of
	December 30, 2012		Benefits		Benefits			December 29, 2013
	(dollars in millions)
Broadcasting	$	-	$	0.1	$	-		$	0.1
Publishing	$	0.8	$	0.8	$	(1.3	)	$	0.3
Total	$	0.8	$	0.9	$	(1.3	)	$	0.4
			Charge for		Payments for
	Balance as of		Separation		Separation			Balance as of
	December 25, 2011		Benefits		Benefits			December 30, 2012
	(dollars in millions)
Publishing	$	1.8	$	1.6	$	(2.6	)	$	0.8
Total	$	1.8	$	1.6	$	(2.6	)	$	0.8

Dividends

In April 2009, our board of directors suspended dividends on our class A and class B shares, and suspended the payment of the cumulative unpaid and undeclared minimum dividend on our formerly outstanding class C shares.  Prior to the August 2012 repurchase of our class C shares, the accumulated unpaid and undeclared minimum class C dividend of approximately $0.14 per share each quarter was required to be paid prior to the payment of any dividends on our class A and class B shares.  Our board of directors periodically reviews our dividend payment policy as well as our ability to pay cash dividends.

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.  In the year ended December 29, 2013, we did not repurchase any shares of our class A common stock.  In the year ended December 29, 2012, we purchased 0.7 million shares of our class A common stock for $3.5 million, or an average of $4.99 per share.  As of December 29, 2013, $37.4 million worth of shares of our class A common stock and/or class B common stock remain available to be purchased under our July 2011 authorization.  In December 2013, the board of directors extended our share repurchase program until the end of fiscal 2015.

On August 13, 2012, we repurchased all 3.3 million outstanding shares of our class C common stock, including all rights associated with such shares of class C common stock. See “Liquidity and Capital Resources.”

Acquisitions and Sales

Effective January 1, 2014, Journal Broadcast Corporation and Journal Broadcast Group, Inc., our broadcasting business, closed on the sale of stations KMIR-TV and My 13 KPSE-TV in Palm Springs, California to OTA Broadcasting, LLC, an affiliate of Virginia based OTA Broadcasting for $17.0 million in cash and certain other contingent consideration.  We expect to record a pre-tax book gain of $10.2 million in the first quarter of 2014.

On May 3, 2013, our broadcasting business completed the asset purchase of 100.3 WNOX-FM licensed to Oak Ridge, Tennessee, in the Knoxville, Tennessee, market from Oak Ridge FM, Inc., for $6.0 million.  We now own four radio stations in Knoxville, Tennessee.

On June 25, 2012, our broadcasting business completed the asset purchase of KHTT-FM and KBEZ-FM in Tulsa, Oklahoma from Renda Broadcasting Corporation for $11.7 million in cash.  We now own five radio stations in Tulsa, Oklahoma.

We had 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 for a purchase price of $2.0 million.  On October 22, 2012, we closed on the acquisition of the remaining assets used in the operation of WACY-TV from ACE TV, Inc.  See Note 8 in the Notes to Financial Statements “Variable Interest Entity.”

On December 6, 2012, our broadcasting business completed the acquisition of NewsChannel 5 Network, LLC from a subsidiary of Landmark Media Enterprises, LLC in Nashville, Tennessee.  The purchase price was $220.0 million including a working capital adjustment of $5.0 million.

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On December 3, 2012, our broadcasting business completed the sale of certain assets (including the FCC licenses) of WKTI-AM in Knoxville, Tennessee for $0.1 million.

On December 3, 2012, Journal Community Publishing Group, Inc., our community publications business, completed the sale of Hodag Buyers’ Guide, North Star Journal, Merrill Foto News, Wausau Buyers’ Guide, Stevens Point Buyers’ Guide, Wood County Buyers’ Guide, Waupaca Buyers’ Guide, Waupaca County Post East, Waupaca County Post West, Clintonville Shoppers’ Guide, New London Buyers’ Guide, Silent Sports, Waupacanow.com, Merrillfotonews.com, Starjournalnow.com, Silentsports.net, Wibuyersguide.com and a single copy distribution network based in Rhinelander, WI for $1.2 million in cash and a $0.8 million note receivable.  We recorded a pre-tax loss on the sale, net of transaction expenses, of $0.3 million.

Cash Flow

Continuing Operations

During 2013, we have used cash provided by operating activities to fund capital expenditures and reduce our debt.  In 2013, we decreased our notes payables to banks by $35.1 million.

Cash provided by operating activities was $53.4 million in 2013 compared to $75.3 million in 2012.  The decrease was primarily due to decreased net earnings driven primarily by decreased political and issue and Olympics advertising, and increased payments related to our executive incentive compensation plans and other performance based plans related to our 2012 results.

Cash used for investing activities was $17.0 million in 2013 compared to $239.9 million in 2012.  Capital expenditures were $12.4 million in 2013 compared to $12.3 million in 2012.  Our capital expenditures in 2013 were primarily at our broadcasting business for needed improvements at our facilities, high definition equipment and digital content management solutions.  We believe these capital expenditures will help us to better serve our advertisers, viewers and listeners and will facilitate our cost control initiatives. In 2013, we acquired WNOX FM for $6.0 million.  In 2012, we acquired NewsChannel 5 Network, LLC for $220.0 million and KHTT-FM and KBEZ-FM for $11.7 million.  In 2012, we sold the majority of our northern Wisconsin community publications for $1.2 million in cash and a $0.8 million note receivable (non-cash consideration), WKTI-AM for $0.1 million, and received payment of $1.6 million on notes receivable from previously sold operations.

Cash used for financing activities was $37.5 million in 2013 compared to cash provided for financing activities of $162.7 million in 2012.  Borrowings under our credit facility in 2013 were $194.8 million and we made payments of $229.9 million, reflecting a $35.1 million decrease in our notes payable to banks compared to borrowings of $350.0 million and payments of $161.2 million in 2012.  In 2012, we made a cash payment of $6.2 million equal to the accumulated unpaid and undeclared dividend on the class C common stock through August 12, 2012.  We did not pay cash dividends in 2013.

Discontinued Operations

There was $0.6 million and $2.0 million of cash provided by the Palm Springs discontinued operations in 2013 and 2012, respectively.

Contractual Obligations

Our contractual obligations as of December 29, 2013 are summarized below:

	Payments due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(dollars in millions)
Contractual obligations
Long-term notes payable to banks (1)	$	241.0	$	20.4	$	39.6	$	181.0	$	-
Unsecured subordinated notes payable		16.2		3.6		6.7		5.9		-
Pension and other postretirement benefits (2)		114.8		11.0		22.6		23.2		58.0
Syndicated programs		12.9		4.6		6.8		1.2		0.3
Operating leases		8.7		2.4		2.8		1.5		2.0
Other liabilities(3)		14.1		4.1		4.5		2.1		3.4
Total	$	407.7	$	46.1	$	83.0	$	214.9	$	63.7

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(1) Includes the associated interest calculated on our unhedged variable rate outstanding borrowings of $195.0 million as of December 29, 2013 at a currently effective blended interest rate of 2.23%.

(2) For the pension and other postretirement benefits, payments included in the table have been actuarially estimated over a ten-year period.  Unfunded non-qualified pension benefit payments and other postretirement benefits are expected to be funded directly from company assets through 2022.  Qualified pension benefit payments are expected to be funded by plan assets through 2022.  While benefit payments under these benefit plans are expected to continue beyond 2022, we believe that an estimate beyond this period is unreasonable.

(3) Other liabilities consist primarily of obligations for unrecognized tax benefits, deferred compensation, capital leases, and severance.

Our secured credit facility expires on December 5, 2017.

Based on actuarial estimates, we expect to make contributions of approximately $95.1 million to the qualified pension plan over a ten-year period.  If actual results differ from the estimates used, the amount of contributions to the qualified pension plan would likely change.  As of December 29, 2013, we expect to make payments over a ten-year period for the non-qualified pension plan and other postretirement benefit plan of $6.7 million and $12.9 million, respectively.

We lease office space, certain broadcasting facilities, distribution centers, buildings used for printing plants and equipment under both short-term and long-term leases accounted for as operating leases.  Some of the lease agreements contain renewal options and rental escalation clauses, as well as provisions for the payment of utilities, maintenance and taxes.

As of December 29, 2013, our expected payment for significant contractual obligations includes approximately $1.0 million for our liability for unrecognized tax benefits and related interest income/expense and penalties.  We have estimated that our liability for unrecognized tax benefits of $1.0 million will be settled in less than one year.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

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

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

Allowance for doubtful accounts

We evaluate the 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 to us (such as bankruptcy filings, credit history, etc.), we record a specific reserve for bad debts against amounts due us to reduce the net recognized receivable to the amount we reasonably believe will be collected.  For all other customers, we recognize reserves for bad debts based on past loss history, the length of time the receivables are past due and the current business environment.  If our evaluations of the collectability of our accounts receivable differ from actual results, increases or decreases in bad debt expense and allowances may be required.

Property and equipment and definite-lived intangibles

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

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Accounting standards require that, if the sum of the future cash flows expected to result from an asset or group of assets, undiscounted and without interest charges, is less than the carrying amount of the asset or group of assets, an asset impairment must be recognized in the financial statements.  An evaluation of our property and equipment and definite-lived intangible assets indicated an impairment of buildings held for sale in 2013 and 2012.  We recognized a $0.2 million and a $0.5 million impairment charge related to buildings held for sale in 2013 and 2012, respectively.  Fair value was determined pursuant to a broker’s opinion of value or an accepted offer to sell the buildings.  The estimated future cash flows related to an asset or group of assets is highly susceptible to change because we must make assumptions about future revenue and the related cost of sales.  Changes in our assumptions could require us to recognize a loss for asset impairment in the future.

Impairment of goodwill and indefinite-lived intangibles

Goodwill and broadcast licenses accounted for 43.7% and 40.8% of total assets as of December 29, 2013 and December 30, 2012, respectively.  The interim and annual impairment tests for goodwill and broadcast licenses in accordance with the FASB’s guidance for goodwill and intangible assets require us to make certain assumptions in determining fair value, including assumptions about the cash flow growth rates of our businesses.  Additionally, the fair values are significantly impacted by factors including competitive industry valuations and long-term interest rates that exist at the time the annual impairment tests are performed.  Accordingly, we may incur additional impairment charges in future periods to the extent we do not achieve our expected cash flow growth rates, and to the extent that market values and long-term interest rates in general decrease and increase, respectively.

The recoverability of goodwill is measured at the reporting unit level, which is defined as either an operating segment or one level below an operating segment.  A component is a reporting unit when the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of the component.  Components may be combined into one reporting unit when they have similar economic characteristics.  In 2013, we combined the community publishing and daily newspaper components into one publishing reporting unit.  We allocated goodwill to our broadcasting and combined publishing reporting unit.  We performed our annual impairment test for both reporting units as of September 30, 2013.

For purposes of testing the carrying values of goodwill related to our reporting units, we determine fair value by using an income and a market valuation approach.  The income approach uses expected cash flows for each reporting unit.  The cash flows are discounted for risk and time value.  In addition, the present value of the projected residual value is estimated and added to the present value of the cash flows.  The market approach is based on price multiples of publicly traded stocks of comparable companies to estimate fair value.  We assign a greater weight to the income approach as the market approach is deemed less reliable due to the differences in entity size and business model between our reporting units and the comparable companies selected.

For our combined publishing reporting unit, we based our fair value estimates on various assumptions about our projected operating results, including continuing declines in publishing revenues as well as an expectation that we will achieve cash flow benefits from our continuing cost cutting measures.  The valuation methodology used to estimate the fair value of our reporting unit requires inputs and assumptions (i.e., market growth, operating cash flow margins and discount rates) that reflect current market conditions as well as management judgment.  These assumptions may change due to changes in market conditions and such changes may result in an impairment of our goodwill.

For the broadcasting reporting unit, we based our fair value estimates, in large measure, on projected financial information which we believe to be reasonable.  However, actual future results may differ from those projections, and those differences may be material.  The valuation methodology used to estimate the fair value of our reporting unit requires inputs and assumptions (i.e., market growth, operating cash flow margins and discount rates) that reflect current market conditions as well as management judgment.

For broadcast licenses at individual television and radio stations, we use the Greenfield Method, which is an income approach commonly used in the broadcast sector to estimate fair value.  This approach assumes the start up of a new station by an independent market participant and incorporates assumptions that are based on past experiences and judgments about future market performance.  These variables include, but are not limited to: the forecasted growth rate of each market (including market population, household income and retail sales), estimated market share, profit margins and operating cash flows of an independent station within a market, estimated capital expenditures and start up costs, risk-adjusted discount rate, likely media competition within the market and expected growth rates into perpetuity to estimate terminal values.  Adverse changes in significant assumptions such as an increase in discount rates or a decrease in projected market revenues, market share or operating cash flows could result in additional non-cash impairment charges on our broadcast licenses in future periods, which could have a material impact on our financial condition and results of operations.  We performed our annual impairment test on our broadcast licenses at individual television and radio stations in 2013, which indicated no impairment.

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Accrued income taxes

The Internal Revenue Service (IRS) and various state Departments of Revenue routinely examine our federal and state tax returns.  We believe our tax positions comply with applicable tax law, and we would vigorously defend these positions if challenged.  The final disposition of any positions challenged by the IRS or state Departments of Revenue could require us to make additional tax payments or have an impact on our effective tax rate.  Nonetheless, we believe that we have adequately reserved for any foreseeable payments related to such matters and consequently do not anticipate any material earnings impact from the ultimate resolution of such matters.  As of December 29, 2013 and December 30, 2012, our liabilities for unrecognized tax benefits and related interest and penalties were $0.9 million in each year.

We deduct broadcast licenses and tax-deductible goodwill over a period of 15 years from the date of acquisition.  The non-cash broadcast license impairment charge recorded in 2012 is not currently deductible for income tax purposes and has caused us to recognize a deferred tax asset.  We believe it is more likely than not that we will realize a tax benefit for our deferred tax assets and we believe that they will be utilized to offset future taxable income over the next 20 years in accordance with current income tax law.  In the future, we may be required to record a valuation allowance against our deferred tax assets if we have future operating losses or reductions in our expected future profitability which would cause us to believe we would be unable to utilize them.

Accrued litigation

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

Employee benefits

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

There are certain assumptions that have a significant effect on our obligations, such as:

· the discount rate – used to arrive at the net present value of the obligations and expense;

· the return on assets – used to estimate the growth in invested asset value available to satisfy certain obligations;

· the employee turnover statistics – used to estimate the number of employees to be paid pension benefits.

The assumptions used in accounting for pension benefits and other postretirement benefits for 2013 and 2012 are:

	Pension Benefits						Postretirement Benefits
	2013			2012			2013			2012
Discount rate for expense		3.95	%		4.55	%		2.75	%		3.85	%
Discount rate for obligations		4.75			3.95			3.55			2.75
Expected return on plan assets		7.25			7.75			-			-

For our pension plans, as of December 29, 2013, a one percent increase or decrease in the discount rate would have the following effects (in millions):

	1% Increase			1% Decrease
Effect on total of service and interest cost components in 2013	less than $0.1			$	(0.2	)
Effect on pension benefit obligation as of December 29, 2013	$	(17.1	)	$	20.7

To determine the discount rate assumptions for the pension and the other postretirement benefit plans, we studied our plans’ specific discount rate by matching our projected benefit payments to a yield curve developed from high grade corporate bonds.  The results of those studies were used as the benchmark to determine the discount rate assumptions.

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

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We make other assumptions that affect the accounting for pension benefits.  Changes in these assumptions affect the benefit obligations and the service and interest cost components of the pension plan and the other postretirement plan and the required funding of the pension plan.  We review these assumptions on an annual basis.

The discount rate and medical cost inflation assumptions could have a significant effect on our other postretirement benefits obligations.  The discount rate is used to arrive at the net present value of the obligation.  The health care cost trend rate is used to calculate the impact future medical costs would have on postretirement obligations.  A one percent increase or decrease in the assumed health care cost trend rate would have the following effects (in millions):

	1% Increase		1% Decrease
Effect on total of service and interest cost components in 2013	less than $0.1		less than $(0.1)
Effect on postretirement benefit obligation as of December 29, 2013	$	0.2	$	(0.2	)

New accounting standards

In July 2013, the FASB issued guidance related to the presentation of an unrecognized tax benefit when a net operating loss carryforward, similar tax loss, or a tax credit carryforward exists.  The new guidance clarifies that companies should present an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward.  This guidance is effective for fiscal years beginning after December 15, 2013, with early adoption permitted.  We adopted this guidance in 2013.  The adoption of this guidance did not impact our financial position or results of operations.

In February 2013, the FASB issued guidance related to items reclassified from accumulated other comprehensive income.  The new guidance requires either in a single note or parenthetically on the face of the financial statements: (i) the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and (ii) the income statement line items affected by the reclassification. This guidance is effective for fiscal years beginning January 1, 2013 with early adoption permitted.  We adopted this guidance in 2013.  The adoption of this guidance did not impact our financial position or results of operations.

Effect of Inflation

Our results of operations and financial condition have not been significantly affected by general inflation.  We have reduced the effects of rising costs through improvements in productivity, cost containment programs and, where the competitive environment permits, increased selling prices.  However, changes in newsprint prices could have an adverse impact on costs, which we may not be able to offset fully in our pricing or cost containment programs.  In addition, inflation and its impact on floating interest rates could affect the amount of interest payments due on our secured credit facilities.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk stemming from changes in interest rates on our long-term notes payable to banks, which are borrowings under our secured revolving credit facilities, and in prices for newsprint.  Changes in these factors could cause fluctuations in our net earnings and cash flows.  Interest rates on our long-term notes payable to banks are variable.  Our borrowings under the secured credit facilities incur interest at either (a) LIBOR plus a margin that ranges from 150.0 basis points to 250.0 basis points, depending on our net debt ratio, or (b) (i) the base rate, which equals the highest of the prime rate set by U.S. Bank National Association, the Federal Funds Rate plus 50.0 basis points or one-month LIBOR plus 100.0 basis points, plus (ii) a margin that ranges from 50.0 basis points to 150.0 basis points, depending on our net debt ratio.  Average interest rates on borrowings under our revolving credit facility ranged from 2.53% at the beginning of 2013 to 2.23% at the end of 2013.  If interest rates had been 100 basis points higher, our annual interest expense would have increased $2.2 million, assuming comparable borrowing levels.  We have not entered into derivative instruments to manage our exposure to interest rate risk.

Price fluctuations for newsprint can have a significant effect on our results of operations.  The average net price per ton was $609 in 2013.  Based on the consumption of newsprint in 2013 for our publishing businesses, a $10 per ton increase or decrease in the price of newsprint would increase or decrease our total cost of newsprint by $0.2 million.  We have not entered into derivative instruments to manage our exposure to newsprint price risk.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

JOURNAL COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

Years Ended December 29, 2013 and December 30, 2012

 (in thousands, except share and per share amounts)

	2013			2012
ASSETS
Current assets:
Cash and cash equivalents	$	1,912		$	2,429
Receivables, net		66,670			64,161
Inventories, net		2,191			2,944
Prepaid expenses and other current assets		3,305			3,953
Syndicated programs		2,816			2,250
Deferred income taxes		2,508			3,032
Current assets of discontinued operations		7,048			7,550
TOTAL CURRENT ASSETS		86,450			86,319
Property and equipment:
Land and land improvements		37,026			37,574
Buildings and building improvements		131,209			132,400
Equipment		236,588			237,833
Construction in progress		2,257			3,476
		407,080			411,283
Less accumulated depreciation		246,531			242,145
Net property and equipment		160,549			169,138
Syndicated programs		5,162			4,777
Goodwill		124,702			125,818
Broadcast licenses		135,166			129,566
Other intangible assets, net		57,763			60,618
Deferred income taxes		20,125			41,573
Other assets		6,101			7,994
TOTAL ASSETS	$	596,018		$	625,803
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	22,154		$	26,743
Accrued compensation		9,134			10,618
Accrued employee benefits		4,865			5,155
Deferred revenue		15,459			16,208
Syndicated programs		2,247			2,521
Accrued income taxes		3,286			3,977
Other current liabilities		5,560			6,788
Current portion of unsecured subordinated notes payable		2,656			2,656
Current portion of long-term notes payable to banks		15,000			-
Current portion of long-term liabilities		276			126
Current liabilities of discontinued operations		885			737
TOTAL CURRENT LIABILITIES		81,522			75,529
Accrued employee benefits		64,541			92,907
Syndicated programs		5,741			5,001
Long-term notes payable to banks		179,950			230,095
Unsecured subordinated notes payable		10,623			13,279
Other long-term liabilities		3,554			3,491
Equity:
Class B - authorized 120,000,000 shares; issued and outstanding: 6,134,093 shares at December 29, 2013 and 6,905,955 shares at December 30, 2012		57			63
Class A - authorized 170,000,000 shares; issued and outstanding: 44,669,851 shares at December 29, 2013 and 43,750,920 shares at December 30, 2012		447			438
Additional paid-in capital		256,734			254,437
Accumulated other comprehensive loss		(39,654	)		(55,739	)
Retained earnings		32,503			6,302
TOTAL EQUITY		250,087			205,501
TOTAL LIABILITIES AND EQUITY	$	596,018		$	625,803

See accompanying notes

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JOURNAL COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 29, 2013, December 30, 2012 and December 25, 2011

 (in thousands, except per share amounts)

	2013			2012			2011
Revenue:
Broadcasting	$	243,432		$	228,703		$	180,739
Publishing		154,558			164,947			170,976
Corporate		(723	)		(532	)		(263	)
Total revenue		397,267			393,118			351,452
Operating costs and expenses:
Broadcasting		118,985			98,492			89,415
Publishing		100,973			107,289			109,557
Corporate		(721	)		(532	)		(263	)
Total operating costs and expenses		219,237			205,249			198,709
Selling and administrative expenses		126,714			127,522			112,466
Broadcast license impairment		-			1,616			735
Total operating costs and expenses and selling and administrative expenses		345,951			334,387			311,910
Operating earnings		51,316			58,731			39,542
Other income and (expense):
Interest income		-			22			117
Interest expense		(7,706	)		(4,483	)		(3,642	)
Other		(188	)
Total other income and (expense)		(7,894	)		(4,461	)		(3,525	)
Earnings from continuing operations before income taxes		43,422			54,270			36,017
Provision for income taxes		17,172			21,688			14,304
Earnings from continuing operations		26,250			32,582			21,713
Earnings (loss) from discontinued operations, net of applicable income tax (benefit) expense of ($13), $518 and $329, respectively		(49	)		743			473
Net earnings	$	26,201		$	33,325		$	22,186
Earnings per share:
Basic - Class A and B common stock:
Continuing operations	$	0.52		$	0.60		$	0.36
Discontinued operations					0.01			0.01
Net earnings	$	0.52		$	0.61		$	0.37
Diluted - Class A and B common stock:
Continuing operations	$	0.52		$	0.60		$	0.36
Discontinued operations					0.01			0.01
Net earnings	$	0.52		$	0.61		$	0.37
Basic and diluted - Class C common stock:
Continuing operations	$	-		$	0.73		$	0.93
Discontinued operations					0.01			0.01
Net earnings	$	-		$	0.74		$	0.94

See accompanying notes

55

JOURNAL COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 29, 2013, December 30, 2012 and December 25, 2011

 (in thousands)

	2013		2012			2011
Net earnings	$	26,201	$	33,325		$	22,186
Other comprehensive income, net of tax:
Change in pension and postretirement, net of tax benefit (expense) of $10,176, $1,792 and $13,421, respectively		16,085		(2,757	)		(20,687	)
Comprehensive income	$	42,286	$	30,568		$	1,499

See accompanying notes

56

JOURNAL COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

Years Ended December 29, 2013, December 30, 2012 and December 25, 2011

 (in thousands, except per share amounts)

															Accumulated
												Additional			Other			Retained			Non-			Treasury
	Preferred		Common Stock									Paid-in			Comprehensive			Earnings			controlling			Stock,
	Stock		Class C			Class B			Class A			Capital			Loss			(Deficit)			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																			22,186									22,186
Comprehensive income																(20,687	)											(20,687	)
Class C minimum dividends ($0.57 per share)																			(1,854	)								(1,854	)
Issuance of shares:
Conversion of class B to class A							(17	)		17																		-
Stock grants							5						498															503
Employee stock purchase plan							1						327															328
Shares purchased and retired										(11	)		(4,129	)														(4,140	)
Treasury shares cancelled							(87	)					(446	)					(108,182	)					108,715			-
Shares withheld from employees for tax withholding							(1	)					(590	)														(591	)
Stock-based compensation													1,114															1,114
Income tax benefits from vesting of restricted stock													402															402
Balance at December 25, 2011	$	-	$	33		$	66		$	438		$	257,552		$	(52,982	)	$	(83	)	$	1,164		$	-		$	206,188
Net earnings																			33,325									33,325
Comprehensive income																(2,757	)											(2,757
Class C minimum dividends ($0.35 per share)																			(1,146	)								(1,146	)
Issuance of shares:
Conversion of class B to class A							(7	)		7																		-
Stock grants							5						384															389
Employee stock purchase plan													271															271
Class C shares repurchase				(33	)								(117	)					(25,794	)								(25,944	)
Shares purchased and retired										(7	)		(3,558	)														(3,565	)
Shares withheld from employees for tax withholding							(1	)					(654	)														(655	)
Stock-based compensation													1,639															1,639
Income tax benefits from vesting of restricted stock													293															293
Purchase of noncontrolling interest													(1,373	)								(1,164	)					(2,537	)
Balance at December 30, 2012	$	-	$	-		$	63		$	438		$	254,437		$	(55,739	)	$	6,302		$	-		$	-		$	205,501
Net earnings																			26,201									26,201
Comprehensive income																16,085												16,085
Issuance of shares:
Conversion of class B to class A							(9	)		9																		-
Stock grants							4						375															379
Employee stock purchase plan													279															279
Shares withheld from employees for tax withholding							(1	)					(683	)														(684	)
Stock-based compensation													1,681															1,681
Income tax benefits from vesting of restricted stock													112															112
Other													533															533
Balance at December 29, 2013	$	-	$	-		$	57		$	447		$	256,734		$	(39,654	)	$	32,503		$	-		$	-		$	250,087

See accompanying notes

57

JOURNAL COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 29, 2013, December 30, 2012 and December 25, 2011

 (in thousands)

	2013			2012			2011
Cash flow from operating activities:
Net earnings	$	26,201		$	33,325		$	22,186
Less (loss) earnings from discontinued operations		(49	)		743			473
Earnings from continuing operations		26,250			32,582			21,713
Adjustments for non-cash items:
Depreciation		20,058			20,590			21,261
Amortization		2,855			1,448			1,381
Provision for doubtful accounts		314			503			779
Deferred income taxes		12,441			16,104			11,066
Non-cash stock-based compensation		2,089			2,028			1,618
Net (gain) loss from disposal of assets		(402	)		493			(589	)
Impairment of broadcast licenses		-			1,616			735
Impairment of long-lived assets		238			493			-
Net changes in operating assets and liabilities, excluding effect of sales and acquisitions:
Receivables		(2,823	)		(2,090	)		(2,012	)
Inventories		753			(1,178	)		(731	)
Accounts payable		(4,589	)		5,936			(2,279	)
Accrued employee benefits		(2,105	)		(1,818	)		1,179
Other assets and liabilities		(1,663	)		(1,451	)		(10,361	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		53,416			75,256			43,760
Cash flow from investing activities:
Capital expenditures for property and equipment		(12,440	)		(12,305	)		(10,590	)
Proceeds from sales of assets		720			1,244			204
Proceeds from sale of businesses		-			2,892			1,574
Insurance recoveries		645			-			-
Acquisition of businesses		(5,955	)		(231,728	)		-
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES		(17,030	)		(239,897	)		(8,812	)
Cash flow from financing activities:
Payments of financing costs		-			(4,583	)		-
Proceeds from long-term notes payable to banks		194,805			349,955			94,409
Payments on notes payable to banks		(229,950	)		(161,165	)		(127,674	)
Payments on unsecured subordinated notes payable		(2,656	)		(9,664	)		-
Principal payments under capital lease obligations		(74	)		(258	)		(343	)
Proceeds from issuance of common stock, net		259			245			295
Income tax benefits from vesting of restricted stock		112			330			464
Redemption of common stock, net		-			(3,910	)		(4,010	)
Purchase of noncontrolling interest		-			(2,038	)		-
Payment of cash equivalent of accrued dividends		-			(6,246	)		-
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES		(37,504	)		162,666			(36,859	)
Cash flow from discontinued operations:
Net operating activities		726			2,418			1,514
Net investing activities		(125	)		(431	)		759
NET CASH PROVIDED BY DISCONTINUED OPERATIONS		601			1,987			2,273
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(517	)		12			362
Cash and cash equivalents:
Beginning of year		2,429			2,417			2,055
End of Year	$	1,912		$	2,429		$	2,417
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes	$	6,087		$	4,317		$	7,710
Cash paid for interest	$	5,552		$	1,521		$	1,709

See accompanying notes

58

1 SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and consolidation—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 thirteen weeks and ending on a Sunday, provided that once every six years the fourth quarterly reporting period will be fourteen weeks.  The fourth quarterly reporting period in our 2012 fiscal year consisted of fourteen weeks.

The consolidated financial statements include the accounts of Journal Communications, Inc. and its wholly owned subsidiaries.  In 2012, we purchased the remaining noncontrolling interest associated with a variable interest entity (VIE) for which we were 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.  All significant intercompany balances and transactions have been eliminated.

Palm Springs television results of operations and the gain on the sale of NorthStar Print Group Inc.’s (NorthStar) real estate holdings in 2011 have been reflected as discontinued operations in our consolidated statements of operations.

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

Revenue recognition—Our principal sources of revenue are the sale of airtime on television and radio stations, the sale of advertising in newspapers and the sale of newspapers to individual subscribers and distributors.  In addition, we sell advertising on our newspaper, television and radio websites and derive revenue from other online activities.  Advertising revenue is recognized in the publishing and broadcasting businesses when advertisements are published, aired or displayed, or when related advertising services are rendered. Newspaper advertising contracts, which generally have a term of one year or less, may provide rebates or discounts based upon the volume of advertising purchased during the terms of the contracts.  Estimated rebates and discounts are recorded as a reduction of revenue in the period the advertisement is displayed.  This requires us to make certain estimates regarding future advertising volumes.  Estimates are based on various factors including historical experience and advertising sales trends.  These estimates are revised as necessary based on actual volumes realized.  Circulation revenue is recognized on a pro-rata basis over the term of the newspaper subscription or when the newspaper is delivered to the customer.  Amounts we receive from customers in advance of revenue recognition are deferred as liabilities.  Deferred revenue to be earned more than one year from the balance sheet date is included in other long-term liabilities in the consolidated balance sheets.

Printing revenue from external customers as well as third-party distribution revenue is recognized when the product is delivered in accordance with the customers’ instructions.

We also derive revenues from retransmission of our broadcast programs by MVPDs.  Retransmission revenues from MVPDs are recognized based on average monthly subscriber counts and contractual rates over the terms of the agreements.

Multiple-deliverable revenue arrangements— Our broadcast business sells airtime on television and radio stations and online advertising 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.  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.  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.

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

Advertising expense—We expense our advertising costs as incurred.  Advertising expense totaled $6,645, $7,438 and $6,915 in 2013, 2012 and 2011, respectively.

Interest expense—All interest incurred during the years ended December 29, 2013, December 30, 2012 and December 25, 2011 was expensed.

Income taxes—Deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.  Valuation allowances are established when management determines that it is more likely than not that some portion or all of a deferred tax asset will not be realized.

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1 SIGNIFICANT ACCOUNTING POLICIES continued

We recognize an uncertain tax position when it is more likely than not to be sustained upon examination by taxing authorities and we measure the tax benefit as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement.

Fair values—The carrying amount of cash and cash equivalents, receivables, accounts payable, accrued severance and barter programming assets and liabilities approximates fair value as of December 29, 2013 and December 30, 2012.

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

Receivables, net—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 MVPDs.  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 at December 29, 2013 and December 30, 2012 was $1,688 and $2,377, respectively.

Concentration of credit risk—Generally, credit is extended based upon an evaluation of the customer’s financial position, and advance payment is not required.  Credit losses are provided for in the financial statements and have been within management’s expectations.  Given the current economic environment, credit losses may increase in the future.

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

	2013			2012
December 29 and December 30
Paper and supplies	$	2,224		$	2,950
Work in process		59			84
Less obsolescence reserve		(92	)		(90	)
Inventories, net	$	2,191		$	2,944

Television programming—We have agreements with distributors for the rights to television programming over contract periods, which generally run for one to five years.  Each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the license period begins and the program is available for its first showing.  The portion of program contracts that become payable within one year is reflected as a current liability in the accompanying consolidated balance sheets.  The rights to program materials are carried at the lower of unamortized cost or estimated net realizable value or in the case of programming obtained by an acquisition, at estimated fair value.  The cost for the rights of first-run and sports programming are recorded as the episodes and games are broadcast.  We do not record an asset and liability for such rights when the license period begins because the programming is not available for broadcast.  Certain of our agreements require us to provide barter advertising time to our distributors.  Barter advertising revenue and expense was $7,210, $5,393 and $4,672 in 2013, 2012 and 2011, respectively.

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

	Years
Building and land improvements		10
Buildings		30
Newspaper printing presses		25
Broadcasting equipment		5-20
Other printing presses		10
Other		3-10

Depreciation expense totaled $20,058, $20,590 and $21,261 in 2013, 2012 and 2011, respectively.  As of December 29, 2013, we have $160.5 million of net property and equipment secured by our credit facility.

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1 SIGNIFICANT ACCOUNTING POLICIES continued

Capital leases—We charge amortization expense of assets recorded under capital leases to depreciation expense in our consolidated statements of operations and accumulated depreciation in our consolidated balance sheets.  At December 29, 2013 we recorded $474 for capital leases in equipment, $162 in accumulated depreciation, $79 in current portion of long-term liabilities and $244 in other long-term liabilities in our consolidated balance sheet.  At December 30, 2012 we recorded $1,834 for capital leases in equipment, $1,683 in accumulated depreciation, $54 in current portion of long-term liabilities and $113 in other long-term liabilities in our consolidated balance sheet.

Intangible assets—Indefinite-lived intangible assets, which consist of broadcast licenses and goodwill, are reviewed for impairment at least annually or more frequently if impairment indicators are present.  We continue to amortize definite-lived intangible assets on a straight-line basis over periods of five to 25 years.  The costs incurred to renew or extend the term of our broadcast licenses and certain customer relationships are expensed as incurred.  See Note 9, “Goodwill, Broadcast Licenses and Other Intangible Assets,” for additional disclosures on our intangible assets.

Notes receivable — We received a $450 secured note resulting from the sale of two radio stations in Boise, Idaho in September 2009.  Interest-only payments were due monthly and the principal balance of the note was due on September 25, 2014.  Principal payments totaling $50 were received in 2011 and 2010.  At December 25, 2011, the note receivable was $400 and reported in other assets in the condensed consolidated balance sheets.  In the third quarter of 2012, the remaining balance was paid.

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.  At December 25, 2011, the notes receivables balances were $433 and $51, respectively, and reported in receivables, net in the consolidated balance sheets.  In 2012, both notes were paid in full.

In partial consideration for the sale of certain publishing assets of Journal Community Publishing Groups, Inc. in December 2012, we received a $772 promissory note bearing interest at 3% and repayable over three years.  At the time of the sale, we recorded a $738 receivable representing the estimated fair value of the note discounted at 6.25%.  These fair value measurements fall within Level 2 of the fair value hierarchy. The notes receivable balance at December 29, 2013 and December 30, 2012 was $524 and $772, respectively.

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

Impairment of long-lived assets—Property and equipment and other definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  If an asset is considered impaired, a charge is recognized for the difference between the fair value and carrying value of the asset or group of assets.  Such analyses necessarily involve significant judgment.  In 2013 and 2012, we recorded property impairment charges of $238 and $368 at our broadcasting segment representing the excess of indicated fair value over the carrying value of a building held for sale.   In 2012, our publishing segment recorded a building impairment charge of $125 representing the excess in indicated fair value over the carrying value of the assets held for sale.  Fair value was determined pursuant to an accepted offer to sell the building or a broker’s opinion of the value based upon similar assets in an inactive market.  This fair value measurement is considered a level 3 measurement under the fair value hierarchy.

Share Repurchases—Shares repurchased under our July 2011 share repurchase program remain authorized but unissued.  The cost of the class A shares repurchased under the program was greater than par value and we recorded a charge to par value and additional paid in capital.  On August 13, 2012, we repurchased all 3,264 outstanding shares of our class C common stock, including all rights associated with such shares of class C common stock.

Earnings per share

Basic

For all periods during which our class C common stock was issued and outstanding (see Note 2 “Notes Payable” regarding the Company’s repurchase of all 3,264 shares of the Company’s class C common stock issued and outstanding in August 2012), 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.

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1 SIGNIFICANT ACCOUNTING POLICIES continued

(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 common stock and may be allocated to class C common stock and non-vested restricted stock if there is undistributed earnings after deducting earnings distributed to class C common stock 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:

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1 SIGNIFICANT ACCOUNTING POLICIES continued

	2013		2012			2011
Numerator for basic earnings from continuing operations for each class of common stock and non-vested restricted stock:
Earnings form continuing operations	$	26,250	$	32,582		$	21,713
Less dividends:
Class A and B		-		-			-
Minimum class C		-		1,146			1,854
Non-vested restricted stock		-		-			-
Total undistributed earnings from continuing operations	$	26,250	$	31,436		$	19,859
Undistributed earnings from continuing operations:
Class A and B	$	26,250	$	29,991		$	18,423
Class C		-		1,233			1,177
Non-vested restricted stock		-		212			259
Total undistributed earnings from continuing operations	$	26,250	$	31,436		$	19,859
Numerator for basic earnings from continuing operations per class A and B common stock:
Minimum dividends on class A and B	$	-	$	-		$	-
Class A and B undistributed earnings		26,250		29,991			18,423
Numerator for basic earnings from continuing operations per class A and B common stock	$	26,250	$	29,991		$	18,423
Numerator for basic earnings from continuing operations per class C common stock:
Minimum dividends on class C	$	-	$	1,146		$	1,854
Class C undistributed earnings		-		1,233			1,177
Numerator for basic earnings from continuing operations per class C common stock	$	-	$	2,379		$	3,031
Denominator for basic earnings from continuing operations for each class of common stock:
Weighted average shares outstanding -
Class A and B		50,259		50,091			51,088
Class C		-		3,264	(1)		3,264
Basic earnings per share from continuing operations:
Class A and B	$	0.52	$	0.60		$	0.36
Class C	$	-	$	0.73		$	0.93

(1) The weighted average number of shares is calculated only for the period of time which the class C common stock was outstanding during the period, not the entire period.

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1 SIGNIFICANT ACCOUNTING POLICIES continued

	2013			2012				2011
Numerator for basic earnings from discontinued operations for each class of common stock and non-vested restricted stock:
Total undistributed earnings from discontinued operations	$	(49	)	$	743			$	473
Undistributed earnings from discontinued operations:
Class A and B		(49	)		709				439
Class C		-			29				28
Non-vested restricted stock		-			5				6
Total undistributed earnings from discontinued operations	$	(49	)	$	743			$	473
Denominator for basic earnings from discontinued operations for each class of common stock:
Weighted average shares outstanding -
Class A and B		50,259			50,091				51,088
Class C		-			3,264	(1	)		3,264
Basic earnings per share from discontinued operations:
Class A and B	$	-		$	0.01			$	0.01
Class C	$	-		$	0.01			$	0.01
Numerator for basic net earnings for each class of common stock:
Net earnings	$	26,201		$	33,325			$	22,186
Less dividends:
Class A and B		-			-				-
Minimum class C		-			1,146				1,854
Non-vested restricted stock		-			-				-
Total undistributed net earnings	$	26,201		$	32,179			$	20,332
Undistributed net earnings:
Class A and B	$	26,201		$	30,701			$	18,862
Class C		-			1,261				1,206
Non-vested restricted stock		-			217				264
Total undistributed net earnings	$	26,201		$	32,179			$	20,332
Numerator for basic net earnings per class A and B common stock:
Dividends on class A and B	$	-		$	-			$	-
Class A and B undistributed  net earnings		26,201			30,701				18,862
Numerator for basic net earnings per class A and B common stock	$	26,201		$	30,701			$	18,862

(1) The weighted average number of shares is calculated only for the period of time which the class C common stock was outstanding during the period, not the entire period.

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1 SIGNIFICANT ACCOUNTING POLICIES continued

	2013		2012				2011
Numerator for basic net earnings per class C common stock:
Minimum dividends on class C	$	-	$	1,146			$	1,854
Class C undistributed net earnings		-		1,261				1,206
Numerator for basic net earnings per class C common stock	$	-	$	2,407			$	3,060
Denominator for basic net earnings for each class of common stock:
Weighted average shares outstanding -
Class A and B		50,259		50,091				51,088
Class C		-		3,264	(1	)		3,264
Basic net earnings per share:
Class A and B	$	0.52	$	0.61			$	0.37
Class C	$	-	$	0.74			$	0.94

(1) The weighted average number of shares is calculated only for the period of time which the class C common stock was outstanding during the period, not the entire period.

Diluted

Diluted earnings per share is computed based upon the assumption that common shares are issued upon exercise of our 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 and performance-based restricted stock units.  For the year ended December 29, 2013, 435 non-vested restricted class B common shares and performance-based restricted stock units are not included in the computation of diluted earnings per share because they are anti-dilutive.  For the year ended December 30, 2012, 538 non-vested restricted class B common shares are not included in the computation of diluted earnings per share 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, and therefore are not included in the diluted weighted average shares outstanding.

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

	2013			2012		2011
Numerator for diluted net earnings per share:
Dividends on class A and B common stock	$	-		$	-	$	-
Total undistributed earnings from continuing operations		26,250			29,991		18,424
Total undistributed earnings from discontinued operations		(49	)		710		439
Net earnings	$	26,201		$	30,701	$	18,863
Denominator for diluted net earnings per share:
Weighted average shares outstanding		50,436			50,091		51,088
Diluted earnings per share:
Continuing operations	$	0.52		$	0.60	$	0.36
Discontinued operations		-			0.01		0.01
Net earnings	$	0.52		$	0.61	$	0.37

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

Prior to the repurchase of the class C common stock, each of the 3,264 class C shares outstanding was convertible at any time at the option of the holder into either (i) 1.363970 class A shares (or a total of 4,452 class A shares) or (ii) 0.248243 class A shares (or a total of 810 class A shares) and 1.115727 class B shares (or a total of 3,642 class B shares).

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1 SIGNIFICANT ACCOUNTING POLICIES continued

New accounting standards

In July 2013, the FASB issued guidance related to the presentation of an unrecognized tax benefit when a net operating loss carryforward, similar tax loss, or a tax credit carryforward exists.  The new guidance clarifies that companies should present an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward.  This guidance is effective for fiscal years beginning after December 15, 2013, with early adoption permitted.  We adopted this guidance in 2013.  The adoption of this guidance did not impact our financial position or results of operations.

In February 2013, the FASB issued guidance related to items reclassified from accumulated other comprehensive income.  The new guidance requires either in a single note or parenthetically on the face of the financial statements: (i) the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and (ii) the income statement line items affected by the reclassification. This guidance is effective for fiscal years beginning January 1, 2013 with early adoption permitted.  We adopted this guidance in 2013.  The adoption of this guidance did not impact our financial position or results of operations.

2 NOTES PAYABLE

Long-term Notes Payable to Banks

On December 5, 2012, we entered into an amended and restated credit agreement for a secured term loan facility and a secured revolving credit facility with initial aggregate commitments of $350,000, including the term loan commitment of $150,000 and the revolving credit facility commitment of $200,000, both of which mature on December 5, 2017.  The secured term loan facility amortizes at 10% per annum payable quarterly with the balance due at maturity.  As of December 29, 2013, the outstanding principal amount of revolving loans drawn under the credit agreement was $56,200, and the outstanding principal amount of term loans drawn under the credit agreement was $138,750.  The proceeds of the senior secured credit facilities were used for the acquisition of NewsChannel 5 Network, LLC and general corporate purposes.  Amounts under the secured revolving credit facility may be borrowed, repaid and reborrowed by us from time to time until the maturity date of the revolving loan facility.  Voluntary prepayments and commitment reductions are permitted at any time without fee upon proper notice and subject to a minimum dollar requirement.  Voluntary prepayments of the secured term loan facility represent a permanent reduction in credit available.  At our option, the commitments under the credit agreement may be increased from time to time by an aggregate amount not to exceed $100,000.  The increase option is subject to the satisfaction of certain conditions, including, without limitation, the identification of lenders (which may include existing lenders or new lenders) willing to provide the additional commitments.

Our borrowings under the credit agreement incur interest at either (a) LIBOR plus a margin that ranges from 150.0 basis points to 250.0 basis points, depending on our net debt ratio, or (b) (i) the base rate, which equals the highest of the prime rate set by U.S. Bank National Association, the Federal Funds Rate plus 50.0 basis points or one-month LIBOR plus 100.0 basis points, plus (ii) a margin that ranges from 50.0 basis points to 150.0 basis points, depending on our net debt ratio.  The initial pricing spread above LIBOR was 225.0 basis points.

Our obligations under the credit agreement are currently guaranteed by certain of our domestic subsidiaries.  Subject to certain exceptions, the credit agreement is secured by liens on certain of our assets 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 the payment of dividends.  The senior secured credit facilities contains the following financial covenants which remain constant over the term of the agreement:

· A consolidated funded debt ratio of not greater than 3.75-to-1, as of the end of each fiscal quarter, as determined for the four fiscal quarters then ended.  This ratio compares, as of the date of determination, our consolidated funded debt on such date to consolidated EBITDA, defined in the credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals, non-cash charges and certain other adjustments.

· A minimum interest coverage ratio of not less than 3-to-1, as of the end of each fiscal quarter, as determined for the four fiscal quarters then ended.  This ratio compares, for any period, our consolidated EBITDA, defined in the credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals, non-cash charges and certain other adjustments.

As of December 29, 2013 and December 30, 2012, we had borrowings of $194,950 and $230,095, respectively, under our credit facilities at a currently effective blended interest rate of 2.23% and 2.53%, respectively.  Remaining unamortized fees in connection with the credit facilities of $3,772, which are included in other assets, are being amortized over the term of the senior secured credit facilities using the straight-line method, which is not materially different than the result utilizing the effective interest method.

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2 NOTES PAYABLE continued

We estimate the fair value of our senior secured credit facilities at December 29, 2013 to be $187,469, based on discounted cash flows using an interest rate of 3.36%.  We estimated the fair value of our secured credit facility at December 30, 2012 to be $224,752, based on discounted cash flows using an interest rate of 3.08%.  Interest rates utilized are estimated based on observed market rates of interest for debt with similar maturities and seniority.  These fair value measurements fall within Level 2 of the fair value hierarchy.

Scheduled minimum principal repayments of the secured term loan facility are $15,000 in 2014, $15,000 in 2015, $15,000 in 2016 and $93,750 in 2017.

Unsecured Subordinated Notes Payable

On August 13, 2012, we repurchased all 3,264 outstanding shares of our class C common stock, including all rights associated with such shares of class C common stock, in exchange for $6,246 in cash and the issuance of 15 unsecured subordinated promissory notes with an aggregate principal amount of $25,599 and bearing interest at a rate of 7.25% per annum.  The cash payment equaled the amount of the minimum unpaid and undeclared dividend on the class C common stock through August 12, 2012.

Seven of the notes with an aggregate principal amount of $9,664 were paid in 2012.  A scheduled minimum principal repayment for $2,656 was made on September 30, 2013.  The remaining seven subordinated notes, with an aggregate remaining principal amount of approximately $13,279, are payable in equal annual installments of $2,656 on September 30 of each of 2014, 2015, 2016, 2017 and 2018, with no prepayment right.  Interest on the notes is payable quarterly.

We estimate the fair value of the subordinated notes at December 29, 2013 to be $13,515 based on discounted cash flows using an interest rate of 7.19%. We estimated the fair value of the subordinated notes at December 30, 2012 to be $16,188 based on discounted cash flows using an interest rate of 7.26%.  Interest rates utilized are estimated based on observed market rates of interest for debt with similar maturities and seniority. These fair value measurements fall within Level 2 of the fair value hierarchy. As of December 29, 2013, $13,279 of the principal amount of the subordinated notes remains outstanding.

3 EMPLOYEE BENEFIT PLANS

We have a defined benefit pension plan covering certain employees.  The defined benefit pension plan was permanently frozen effective January 1, 2011.  The plan provides benefits based on years of service and the average compensation for the employee’s last five years of employment.  Plan assets consist primarily of listed stocks and government and other bonds.

We also sponsor an unfunded non-qualified pension plan for certain employees whose benefits under the pension plan and the 401(k) plan may be restricted due to limitations imposed by the Internal Revenue Service.  The unfunded non-qualified pension plan was permanently frozen effective January 1, 2011.  The disclosure for the unfunded non-qualified pension plan for all years presented is combined with the defined benefit pension plan.

In addition, we provide postretirement health benefits to certain retirees and their eligible spouses and certain full-time active employees who did not attain age 50 by December 31, 2006.  Full-time active employees who retire after April 1, 2007 do not receive an employer contribution for health benefits after attaining age 65.  Due to certain plan changes, we do not expect the plan will qualify for actuarial equivalent pharmaceutical benefits under the Medicare Part D federal subsidy.

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3 EMPLOYEE BENEFIT PLANS continued

							Other
	Pension Benefits						Postretirement Benefits
Years ended December 29 and December 30	2013			2012			2013			2012
Change in benefit obligations
Benefit obligation at beginning of year	$	182,004		$	171,028		$	14,608		$	17,274
Service cost		-			-			55			14
Interest cost		7,009			7,578			380			630
Actuarial (gain) loss		(15,365	)		12,322			(277	)		(2,010	)
Benefits paid		(9,156	)		(8,924	)		(1,669	)		(1,300	)
Benefit obligation at end of year	$	164,492		$	182,004		$	13,097		$	14,608
							Other
	Pension Benefits						Postretirement Benefits
Years ended December 29 and December 30		2013			2012			2013			2012
Change in plan assets
Fair value of plan assets at beginning of year	$	102,602		$	96,699		$	-		$	-
Actual gain on plan assets		15,386			11,672			-			-
Company contributions		3,114			3,155			1,669			1,300
Benefits paid		(9,156	)		(8,924	)		(1,669	)		(1,300	)
Fair value of plan assets at end of year	$	111,946		$	102,602		$	-		$	-
Funded status	$	(52,546	)	$	(79,402	)	$	(13,097	)	$	(14,608	)
							Other
	Pension Benefits						Postretirement Benefits
Years ended December 29 and December 30		2013			2012			2013			2012
Acounts recognized in consolidated balance sheets
Current liabilities	$	(491	)	$	(476	)	$	(1,568	)	$	(1,645	)
Noncurrent liabilities		(52,055	)		(78,926	)		(11,529	)		(12,963	)
Total	$	(52,546	)	$	(79,402	)	$	(13,097	)	$	(14,608	)
	Pension Benefits
	Actuarial			Prior			Deferred
	Loss			Service			Income
	(Gain), Net			Credit			Taxes			Total
Amounts recognized in accumulated other comprehensive loss
As of December 30, 2012	$	93,217		$	(48	)	$	(37,052	)	$	56,117
Current year change		(26,213	)		10			10,152		$	(16,051	)
As of December 29, 2013	$	67,004		$	(38	)	$	(26,900	)	$	40,066

	Other Postretirement Benefits
	Actuarial			Prior			Deferred
	Loss			Service			Income
	(Gain), Net			Credit			Taxes		Total
Amounts recognized in accumulated other comprehensive loss
As of December 30, 2012	$	183		$	(783	)	$	222	$	(378	)
Current year change		(277	)		219			24	$	(34	)
As of December 29, 2013	$	(94	)	$	(564	)	$	246	$	(412	)

The accumulated benefit obligation for the pension plans was $164,492 and $182,004 at December 29, 2013 and December 30, 2012, respectively.

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3 EMPLOYEE BENEFIT PLANS continued

	Pension Benefits
Years ended December 29, December 30 and December 25	2013			2012			2011
Components of net periodic benefit cost
Service cost	$	-		$	-		$	-
Interest cost		7,009			7,578			7,850
Expected return on plan assets		(7,325	)		(8,454	)		(9,594	)
Amortization of:
Unrecognized prior service credit		(10	)		(10	)		(10	)
Unrecognized net loss		2,787			2,038			979
Net periodic benefit cost included in operating costs and expenses and selling and administrative expenses	$	2,461		$	1,152		$	(775	)

	Other Postretirement Benefits
Years ended December 29, December 30 and December 25	2013			2012			2011
Components of net periodic benefit cost
Service cost	$	55		$	14		$	53
Interest cost		380			630			827
Amortization of:
Unrecognized prior service credit		(219	)		(219	)		(219	)
Unrecognized net transition obligation		-			546			549
Unrecognized net loss		-			188			-
Net periodic benefit cost included in selling and administrative expenses	$	216		$	1,159		$	1,210

The unrecognized net loss and prior service credit for the defined benefit pension plans that is expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $2,122 and ($10), respectively.  The prior service credit and transition obligation for the other postretirement pension plan that is expected to be amortized from other accumulated comprehensive income into net periodic benefit cost over the next fiscal year is ($219) and $0, respectively.

The costs for our pension benefits and other postretirement benefits are actuarially determined.  Key assumptions utilized at the measurement dates of December 29, 2013 and December 30, 2012 for pension benefits and for other postretirement benefits include the following:

Weighted-average assumptions used to determine benefit obligations:

							Other
	Pension Benefits						Postretirement Benefits
December 29 and December 30	2013			2012			2013			2012
Discount rate		4.75	%		3.95	%		3.55	%		2.75	%
Rate of compensation increases		-			-			-			-

Weighted-average assumptions used to determine net periodic benefit cost:

										Other
	Pension Benefits									Postretirement Benefits
December 29, December 30 and December 25	2013			2012			2011			2013			2012			2011
Discount rate		3.95	%		4.55	%		5.35	%		2.75	%		3.85	%		4.95	%
Expected return on plan assets		7.25			7.75			8.25			-			-			-
Rate of compensation increases		-			-			-			-			-			-

To determine the discount rate assumptions for the pension and the postretirement benefit plans, we studied our plans’ specific discount rate by matching our projected benefit payments to a yield curve developed from high grade corporate bonds.  The results of those studies were used as the benchmark to determine the discount rate assumptions.

We studied historical markets to determine the long-term rate of return assumption for plan assets.  We preserved the long-term historical relationships between equities and fixed-income securities, consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run.  We evaluate current market factors such as inflation and interest rates before we determine long-term capital market assumptions.  We review peer data and historical returns to check for reasonableness and appropriateness.  We anticipate our expected rate of return on plan assets assumption to be 6.75% for our 2014 valuation.

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3 EMPLOYEE BENEFIT PLANS continued

The assumed health care cost trend rate used in measuring the postretirement benefit obligation for retirees for 2013 is 9.00%, grading down to 5.00% in the year 2021 and thereafter.  The assumed health care cost trend rates have a significant effect on the amounts reported for other postretirement benefits.  A 1% change in the assumed health care cost trend rate would have the following effects:

		1%	1%
	Increase		Decrease
Effect on total of service and interest cost components in 2013	$	10	$	(9	)
Effect on postretirement benefit obligation as of December 29, 2013	$	197	$	(191	)

Plan Assets

The following tables present the fair value of our plan assets by level of the fair value hierarchy.  In accordance with the FASB’s guidance for fair value measurements, level 1 inputs are quoted prices in active markets for identical assets; level 2 inputs are significant other observable inputs; and level 3 inputs are significant unobservable inputs.

	Level 1		Level 2		Level 3
	Inputs		Inputs		Inputs		Total
December 29, 2013
Mutual funds		111,205		-		-		111,205
Money-market fund		-		740		-		740
Fair value of plan assets	$	111,205	$	740	$	-	$	111,945
	Level 1		Level 2		Level 3
	Inputs		Inputs		Inputs		Total
December 30, 2012
Cash	$	715	$	-	$	-	$	715
Mutual funds		89,430		-		-		89,430
Money-market fund		-		7		-		7
Collective trust fund		-		12,450		-		12,450
Fair value of plan assets	$	90,145	$	12,457	$	-	$	102,602

Our pension plan weighted average asset allocations at December 29, 2013 and December 30, 2012 by asset category are as follows:

	Plan Assets
December 29 and December 30	2013			2012
Equity securities		42.2	%		65.2	%
Fixed-income securities		57.2			34.9
Other		0.6			(0.1	)
Total		100.0	%		100.0	%

We employ a dynamic investment strategy, changing the allocation between return-seeking and liability hedging assets to de-risk the plan as the funded ratio improves. We believe the strategy provides a reasonable probability of achieving growth of assets that will assist in closing the Plan’s funding gap, while removing risk systematically as we reach our long-term goal of being fully-funded.  Based on an assessment of our long-term goals and desired risk levels, we developed a glide path that adjusts the target allocation to return-seeking assets as well as the corresponding minimum and maximum allocations as the Plan’s funded status improves.  The funded status is monitored on a quarterly basis.  We seek to maintain a diversified portfolio within the return-seeking asset portfolio and the liability hedging portfolio using a diversified blend of equity and debt investments.  The return-seeking component is diversified across U.S. and non-U.S. stocks, both actively and passively managed.  The liability hedging component is diversified across the maturity, quality and sector spectrum. To achieve an appropriate level of expected return, value-added potential, and risk, we adopted the following target allocations within the return-seeking segment:

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3 EMPLOYEE BENEFIT PLANS continued

	Percent of Return-Seeking Portfolio
	Target
U.S. Equity		33.0	%
Non-U.S. Equity (Developed and Emerging Markets)		33.0
Global Equity		34.0

Contributions

We fund our defined benefit pension plan at the minimum amount required by the Pension Protection Act of 2006.  During 2013, we contributed $2,710 to our qualified defined benefit pension plan and $404 to our non-qualified pension plan, respectively.  Based on the most recent current projections and after giving effect to our election under the recently enacted Moving Ahead for Progress in the 21^st Century Act (MAP-21) pension legislation, we do not expect to contribute to our qualified defined benefit pension plan in 2014.  We expect to contribute $491 to our unfunded non-qualified pension plan in 2014.

Benefit Payments

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

			Other
	Pension		Postretirement
	Benefits		Benefits
2014	$	9,399	$	1,568
2015		9,669		1,545
2016		9,869		1,509
2017		10,015		1,524
2018		10,142		1,485
2019-2023		52,740		5,241

The 401(k) plan is a defined contribution benefit plan covering substantially all employees.  The plan allows employees to defer up to 50% of their eligible wages, up to the IRS limit, on a pre-tax basis.  In addition, employees can contribute up to 50% of their eligible wages after taxes.  The maximum combined total contribution may not exceed 50% of each employee’s eligible wages.  Each employee who elects to participate is eligible to receive company matching contributions.  The matching contributions, recorded as an operating expense, were $2,436, $1,979, and $2,070 in 2013, 2012, and 2011, respectively.  We contribute $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.

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4 INCOME TAXES

The components of the provision (benefit) for income taxes consist of the following:

Years ended December 29, December 30 and December 25	2013			2012			2011
Continuing operations
Current:
Federal	$	3,864		$	5,290		$	2,169
State		867			294			1,069
Total current		4,731			5,584			3,238
Deferred:
Federal		10,438			12,828			9,575
State		2,003			3,276			1,491
Total deferred		12,441			16,104			11,066
Total provision for income taxes for continuing operations	$	17,172		$	21,688		$	14,304
Discontinued operations
Current:
Federal	$	(649	)	$	(210	)	$	(412	)
State		(118	)		(11	)		(74	)
Total current		(767	)		(221	)		(486	)
Deferred:
Federal		628			617			671
State		126			122			144
Total deferred		754			739			815
Total provision (benefit) for income taxes for discontinued operations	$	(13	)	$	518		$	329

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

Years ended December 29, December 30 and December 25	2013			2012			2011
Statutory federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		4.5			5.0			5.1
Other		0.1			-			(0.4	)
Effective income tax (benefit) rate		39.6	%		40.0	%		39.7	%

Temporary differences that give rise to the deferred tax assets and liabilities at December 29, 2013 and December 30, 2012 are as follows:

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4 INCOME TAXES continued

	2013			2012
Current assets
Receivables	$	388		$	720
Inventories		33			32
Other assets		676			668
Accrued compensation		549			731
Accrued employee benefits		930			998
Total current deferred tax assets		2,576			3,149
Current liabitites
Accrued state taxes		(68	)		(117	)
Total current deferred tax liability		(68	)		(117	)
Total net current deferred tax assets	$	2,508		$	3,032
Non-current assets
Accrued employee benefits	$	24,530		$	34,445
State deferred income taxes		2,251			4,502
State net operating loss		2,192			2,122
Intangible assets		9,813			19,989
Other assets		484			278
Total non-current deferred tax assets		39,270			61,336
Non-current liabilities
Property and equipment		(18,584	)		(19,468	)
Valuation allowances		(184	)		(199	)
Other liabilities		(377	)		(96	)
Total non-current deferred tax assets		(19,145	)		(19,763	)
Total net non-current deferred tax assets	$	20,125		$	41,573

We deduct broadcast licenses and tax-deductible goodwill over a period of 15 years from the date of acquisition.  The non-cash broadcast license impairment charge recorded in 2012 is not currently deductible for income tax purposes and has caused us to recognize a deferred tax asset.  We believe it is more likely than not that we will realize a tax benefit for our deferred tax assets and we believe that they will be utilized to offset future taxable income over the next 20 years in accordance with current income tax law.  In the future, we may be required to record a valuation allowance against our deferred tax assets if we have future operating losses or reductions in our expected future profitability which would cause us to believe we would be unable to utilize them.

At December 29, 2013, we have $2,192 of tax-effected state net operating loss carryforwards available to offset against future taxable income over the next 20 years.  The net operating losses begin expiring in 2028.  To the extent we believe it is more likely than not that certain of the net operating loss carryforwards will expire unused, we have recorded $0 in valuation allowances.  There are also $184 of capital loss carryforwards that will expire in 2017.  We have $184 in valuation allowances for these capital loss carryforwards due to uncertainties surrounding their use.

We file tax returns in the United States federal jurisdiction, as well as in approximately 14 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.  Accordingly, our 2010 through 2012 tax returns are open for federal purposes, and our 2009 through 2012 tax returns remain open for state tax purposes, unless the statute of limitations has been previously extended.  Currently, we are under audit by the IRS for our 2010 and 2011 tax returns, in Wisconsin for our 2004 through 2007 tax returns and in Illinois for our 2006 and 2007 tax returns.

As of December 29, 2013, our liability for unrecognized tax benefits was $727, which, if recognized, would have an impact on our effective tax rate.  As of December 29, 2013, it is reasonably possible for $1,003 of unrecognized tax benefits and related interest to be recognized within the next 12 months due to settlements with taxing authorities.

The following table summarizes the activity related to our unrecognized tax benefits during 2013, 2012 and 2011:

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4 INCOME TAXES continued

	2013			2012			2011
Beginning balance	$	762		$	885		$	913
Increases due to prior year tax provisions		-			-			14
Decreases related to prior year tax provisions		-			-			(10	)
Decreases due to the expiration of statutes of limitations		(8	)		(7	)		(32	)
Decreases due to settlements		(27	)		(116	)		-
Ending Balance	$	727		$	762		$	885

We recognize interest income/expense and penalties related to unrecognized tax benefits in our provision for income taxes.  At December 29, 2013 and December 30 2012, we had $276 and $229, respectively, accrued for interest expense and penalties.  During 2013 and 2012, we recognized $56 and $29 of interest expense, respectively, related to unrecognized tax benefits.  Our liability for interest and penalties decreased by $8 due to settlements with taxing authorities.

5 COMMITMENTS AND CONTINGENCIES

We lease office space, certain broadcasting facilities, distribution centers, delivery vehicles and equipment under both short-term and long-term leases accounted for as operating leases.  Some of the lease agreements contain renewal options and rental escalation clauses, as well as provisions for the payment of utilities, maintenance and taxes.

As of December 29, 2013, our future minimum rental payments due under noncancellable operating lease agreements consist of the following:

	Due In
	Fiscal Year
2014	$	2,433
2015		1,709
2016		1,127
2017		1,024
2018		501
Thereafter		1,857
	$	8,651

Our publishing businesses lease delivery trucks accounted for as capital leases.  As of December 29, 2013, our future minimum rental payments due under capital lease agreements consist of the following:

	Due In
	Fiscal Year
2014	$	79
2015		82
2016		57
2017		37
2018		38
Thereafter		30
	$	323

Rent expense charged to our continuing operations for 2013, 2012 and 2011 was $4,333, $4,545 and $4,207, respectively.  We amortize rent expense on a straight-line basis for leases with rent escalation clauses. Rental income from subleases included in our continuing operations for 2013, 2012 and 2011 was $222, $218, and $67, respectively.  There were no noncancellable subleases as of December 29, 2013.

We have $1,879 of standby letters of credit for business insurance purposes.

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5 COMMITMENTS AND CONTINGENCIES continued

Over the next four years, we are committed to purchase and provide advertising time in the amount of $9,510 for television program rights that currently are not available for broadcast, including programs not yet produced. If such programs are not produced, our corresponding commitment would expire without obligation.

We provided a guarantee to the landlord of our former New England community publications business, which was sold in 2007, with respect to tenant liabilities and obligations associated with a lease which expires in December 2016. As of December 29, 2013, our potential obligation pursuant to the guarantee was $549, plus costs of collection, attorney fees and other charges incurred if the tenant defaults.  As part of the sales transaction, we received a guarantee from the parent entity of the buyer of our New England business that the buyer will satisfy all the liabilities and obligations of the assigned lease. In the event that the buyer fails to satisfy its liabilities and obligations and the landlord invokes our guarantee, we have a right to indemnification from the buyer’s parent entity.

6 SHAREHOLDERS’ EQUITY

On August 13, 2012, we repurchased all 3,264 outstanding shares of our class C common stock, including all rights associated with such shares of class C common stock.  In conjunction with the repurchase, we paid $6,246 in cash equal to the amount of the minimum unpaid and undeclared dividend on the class C common stock through August 12, 2012.  We currently have two classes of common stock outstanding.

Class B shares are held by our current and former employees, our non-employee directors and Grant family shareholders.  These shares are entitled to ten votes per share, and are convertible to class A shares at the option of the holder after first offering to sell them to other eligible purchasers through the offer procedures set forth in our articles of incorporation.  Dividends on class B shares are equal to those declared on the class A shares.  Class A shares are publicly traded on the New York Stock Exchange under the symbol “JRN”. In 2011, we retired 8,677 class B shares that we held in our treasury. These shares are now designated as authorized and unissued.  The excess of the cost of treasury stock over its par value was allocated between retained earnings and paid-in capital.

The changes in the number of shares of our common stock (excluding Treasury stock) during 2013, 2012 and 2011 are as follows (in thousands):

	Common Stock
	Class C			Class B			Class A
Balance at December 26, 2010		3,264			8,595			43,196
Conversion of class B shares to class A shares		-			(1,683	)		1,683
Shares repurchased		-			-			(1,100	)
Shares issued under equity incentive and employee stock purchase plans		-			302			-
Balance at December 25, 2011		3,264			7,214			43,779
Conversion of class B shares to class A shares		-			(682	)		682
Shares repurchased		(3,264	)					(710	)
Shares issued under equity incentive and employee stock purchase plans		-			374			-
Balance at December 30, 2012		-			6,906			43,751
Conversion of class B shares to class A shares		-			(919	)		919
Shares repurchased		-			-			-
Shares issued under equity incentive and employee stock purchase plans		-			147			-
Balance at December 29, 2013		-			6,134			44,670

7 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.

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7 STOCK-BASED COMPENSATION continued

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 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 December 29, 2013, there are 2,335 shares available for issuance under the 2007 Plan.

During the years ended December 29, 2013, December 30, 2012 and December 25, 2011, we recognized $2,089, $2,056 and $1,649, respectively, in stock-based compensation expense. Total income tax benefit recognized related to stock-based compensation for the years ended December 29, 2013, December 30, 2012 and December 25, 2011 was $826, $822 and $656, 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 December 29, 2013, total unrecognized compensation cost related to stock-based awards was $1,836, net of estimated forfeitures, which we expect to recognize over a weighted average period of 1.1 years.  Stock-based compensation expense is reported in selling and administrative expenses and the net gain on discontinued operations in our consolidated 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 2013 is:

				Weighted
				Average Grant
	Shares			Date Fair Value
Non-vested at December 30, 2012		538		$	5.30
Granted		228			6.42
Vested		(319	)		5.34
Forfeited		(12	)		5.56
Non-vested at December 29, 2013		435		$	5.85

Our non-vested restricted stock grants vest from one to four years from the grant date.  We expect our non-vested restricted stock grants to fully vest over the weighted average remaining service period of 1.1 years.  The total grant date fair value of shares vesting during 2013 was $1,701.  There was an aggregate of 382 unrestricted and non-vested restricted stock grants issued to our non-employee directors (90 shares) and employees (292 shares) in 2012 at a weighted average fair value of $5.12 per share, of which 192 shares are vested as of December 29, 2013 with a total grant date fair value of $928.  There were 368 unrestricted and non-vested restricted stock grants issued to our directors (101 shares) and employees (267 shares) during 2011 at a weighted average fair value of $5.63 per share, of which 185 shares are vested as of December 29, 2013 with a total grant date fair value of $1,003.

Performance Units

In 2012 and 2013, the compensation committee of our board of directors approved the grant of performance-based restricted stock units (performance units) under our 2007 Plan, which represent the right to earn shares of class B common stock based on continued employment and the achievement of specified targets for adjusted cumulative EBITDA over specified fiscal year performance periods.  We value performance unit awards at the closing market price of our class A common stock on the grant date.

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7 STOCK-BASED COMPENSATION continued

A summary of stock grant activity during 2013 is:

			Weighted Average
			Grant Date
	Shares		Fair Value
Non-vested at December 30, 2012		77	$	5.59
Granted		74		6.33
Vested		-		-
Forfeited		-		-
Non-vested at September 29, 2013		151		5.95

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 2013 is:

						Weighted Average
						Contractual Term
				Weighted Average		Remaining
	SARS			Exercise Price		(years)
Outstanding and exercisable at December 30, 2012		1,083		$	11.26		4.6
Granted		-
Exercised		(341	)		7.57
Forfeited		-
Expired		-
Outstanding and exercisable at December 29, 2013		742		$	13.30		3.9

All SARs have vested.  The aggregate intrinsic value of the SARs exercised during 2013 was $563.  The aggregate intrinsic value of the SARs outstanding and exercisable at the end of 2013 is $39.

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 shares of our class B common stock are authorized for sale under this plan.  There were 45 class B common shares sold to employees under this plan in 2013 at a weighted average fair value of $5.63.  As of December 29, 2013, there are 2,162 shares available for sale under the plan.

8 VARIABLE INTEREST ENTITY

We had 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 for a purchase price of $2,038, pending FCC rule changes and approval.  In May 2012, we filed an application with the FCC to convert the local marketing agreement into an ownership interest through a failed station waiver, which was pending approval.  Under the affiliation agreement, ACE TV, Inc. provided the programming for WACY-TV and we sold advertising time, provided all other television operating activities and owned certain assets used by WACY-TV.  Based on our power to direct certain activities and our right to ultimately acquire certain additional assets, including the broadcast license, we determined that ACE TV, Inc. was a VIE and that we were the primary beneficiary of the variable interests of WACY-TV.  As a result, we consolidated the net assets of ACE TV, Inc., aggregating $1,164 which consisted primarily of a broadcast license and investments.  The investments of ACE TV, Inc. could be used only to settle obligations of ACE TV, Inc.  Creditors of ACE TV, Inc. had no recourse to our general credit.  We did not provide financial or other support that we were not contractually required to provide.  On October 22, 2012, we closed on the acquisition of the remaining assets used in the operation of WACY-TV from ACE TV, Inc.

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9 GOODWILL, BROADCAST LICENSES 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 trade names over a period of 25 years.  Management determined there were no significant adverse changes in the value of these assets as of December 29, 2013.

Amortization expense was $2,855, $1,601 and $1,391 for 2013, 2012 and 2011, respectively.  Estimated amortization expense for our next five fiscal years is $2,818 for 2014, $2,809 for both 2015 and 2016, and $2,784 for both 2017 and 2018.

The gross carrying amount, accumulated amortization and net carrying amount of the major classes of definite-lived intangible assets as of December 29, 2013 and December 30, 2012 is as follows:

	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
December 29, 2013
Network affiliation agreements	$	66,078	$	(9,905	)	$	56,173
Customer lists		4,149		(3,661	)		488
Non-compete agreements		8,510		(8,510	)		-
Other		2,726		(1,624	)		1,102
Total	$	81,463	$	(23,700	)	$	57,763
December 30, 2012
Network affiliation agreements	$	66,078	$	(7,261	)	$	58,817
Customer lists		4,149		(3,525	)		624
Non-compete agreements		8,510		(8,501	)		9
Other		2,726		(1,558	)		1,168
Total	$	81,463	$	(20,845	)	$	60,618

During 2012, our community publications business reporting unit sold all but two of its northern Wisconsin publications.  As part of the transactions, we wrote off customer lists, non-compete agreements and other intangible assets with a net carrying amount of $390.

	Years
Network affiliation agreements		25
Customer lists		9
Non-compete agreements		5
Other		16

Broadcast Licenses

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 carrying value of our broadcast licenses was $135,166 and $129,566 as of December 29, 2013 and December 30, 2012, respectively.

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9 GOODWILL, BROADCAST LICENSES AND OTHER INTANGIBLE ASSETS continued

2013 Annual Impairment Test

For broadcast licenses at individual television and radio stations, we use the Greenfield Method, an income approach commonly used in the broadcast sector, to estimate fair value.  This approach assumes the start up of a new station by an independent market participant, and incorporates assumptions that are based on past experiences and judgments about future market performance.  These variables include, but are not limited to: the forecasted growth rate of each market (including market population, household income and retail sales), estimated market share, profit margins and operating cash flows of an independent station within a market, estimated capital expenditures and start up costs, risk-adjusted discount rate, likely media competition within the market and expected growth rates into perpetuity to estimate terminal values.  Adverse changes in significant assumptions such as an increase in discount rates, or a decrease in projected market revenues, market share or operating cash flows could result in additional non-cash impairment charges on our broadcast licenses in future periods, which could have a material impact on our financial condition and results of operations.

The fair value measurements determined for purposes of performing our impairment tests are considered level 3 under the fair value hierarchy because they require significant unobservable inputs to be developed using estimates and assumptions which we determine and reflect those that a market participant would use.

Our annual impairment test on broadcast licenses was performed at individual television and radio stations as of September 30, 2013.  The fair value of the FCC licenses of our Tulsa radio stations KHTT-FM and KBEZ-FM, both acquired in 2012, were within 1% of the book value.  The impairment tests indicated none of our television and radio broadcast licenses were impaired.

2012 Annual Impairment Test

Our annual impairment test on broadcast licenses was performed at individual television and radio stations as of September 24, 2012. The impairment tests indicated two of our television broadcast licenses and two of our radio broadcast licenses were impaired due to declines in revenue share, declines in projected long-term market revenues, and a reduction in radio perpetuity growth rates.  In accordance with the FASB's guidance for goodwill and intangible assets, our broadcast licenses were written down to their estimated fair value of $79,866 (excludes the broadcast license acquired in December 2012 with the acquisition of NewsChannel 5 Network, LLC), resulting in a $887 non-cash impairment charge for television and a $729 non-cash impairment charge for radio in the fourth quarter of 2012.

2011 Annual Impairment Test

Our annual impairment test on broadcast licenses was performed at individual television and radio stations as of September 26, 2011. The impairment tests indicated three of our television broadcast licenses were impaired due to a decline in projected long-term market revenues and an increase in the discount rates.  The changes in the discount rate used for our broadcast licenses are primarily driven by changes in the expected return on the public equity of comparable companies in the television and media sector and the average cost of capital.  In accordance with the FASB's guidance for goodwill and intangible assets, our broadcast licenses were written down to their estimated fair value of $81,547, resulting in a $735 non-cash impairment charge in the fourth quarter of 2011.

Goodwill

2013 Annual Impairment Test

In 2013, we determined our community publishing and daily newspaper reporting units have similar economic characteristics and therefore were combined for the 2013 annual impairment test.  Our annual impairment test on goodwill as of September 30, 2013 indicated there was no impairment of our goodwill at our broadcast or combined publishing reporting units.

For purposes of testing the carrying value of goodwill related to our combined publishing reporting unit, we determine fair value using an income and a market valuation approach.  The income approach uses expected cash flows of the reporting unit.  The cash flows are discounted for risk and time value.  In addition, the present value of the projected residual value is estimated and added to the present value of the cash flows.  The market approach is based on price multiples of publicly traded stocks of comparable companies to estimate fair value.  Each approach estimated a fair value exceeding carrying value.  We base our fair value estimates on various assumptions about our projected operating results, including continuing declines in publishing revenues as well as an expectation that we will achieve cash flow benefits from our continuing cost cutting measures.  The valuation methodology used to estimate the fair value of our reporting unit requires inputs and assumptions (i.e., market growth, operating cash flow margins and discount rates) that reflect current market conditions as well as management judgment.  These assumptions may change due to changes in market conditions and such changes may result in an impairment of our goodwill.  Actual operating results may not achieve these assumptions in the near term and such results may result in future impairment.

2012 Annual Impairment Test

Our annual impairment test on goodwill as of September 24, 2012 indicated there was no impairment of our goodwill at our broadcast or community publications reporting units.

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9 GOODWILL, BROADCAST LICENSES AND OTHER INTANGIBLE ASSETS continued

2011 Interim and Annual Impairment Tests

During the third quarter of 2011, we sold the remaining Florida-based businesses of our community publications reporting unit. In conjunction with the sale, an interim impairment test as of September 25, 2011 was performed on the carrying value of $3,857 of goodwill associated with this reporting unit. Our interim impairment test indicated there was no goodwill impairment. Our annual impairment tests on goodwill associated with the broadcasting and community publications reporting units as of September 26, 2011 indicated there was no impairment of our goodwill.

The changes in the carrying amount of goodwill by reporting segment during the years ended December 29, 2013 and December 30, 2012 are as follows:

	Broadcasting			Publishing			Total
Goodwill	$	233,976		$	20,579		$	254,555
Accumulated impairment losses		(229,163	)		(16,722	)		(245,885	)
Balance as of December 25, 2011		4,813			3,857			8,670
Goodwill related to the sale of a business		-			(923	)		(923	)
Goodwill related to the purchase of a business		118,071			-			118,071
Goodwill		352,047			19,656			371,703
Accumulated impairment losses		(229,163	)		(16,722	)		(245,885	)
Balance as of December 30, 2012		122,884			2,934			125,818
Adjustment of Nashville NewsChannel 5 Network, LLC Goodwill		(1,447	)		-			(1,447	)
Goodwill related to the purchase of a business		331			-			331
Goodwill		350,931			19,656			370,587
Accumulated impairment losses		(229,163	)		(16,722	)		(245,885	)
Balance as of December 29, 2013	$	121,768		$	2,934		$	124,702

10 ACQUISITIONS AND DIVESTITURES

2013

On May 3, 2013, our broadcasting business completed the asset purchase of 100.3 WNOX-FM (WNOX), licensed to Oak Ridge, Tennessee, in the Knoxville, Tennessee, market from Oak Ridge FM, Inc., for $5,955.  We now own four radio stations in Knoxville.  The goodwill of $331 arising from the acquisition is attributable to the synergies expected from aligning WNOX with our cluster of radio stations within the Knoxville, Tennessee market.

The estimated fair values of identifiable assets acquired and liabilities assumed for WNOX-FM at the acquisition date are as follows:

	WNOX-FM
	Knoxville, TN
Equipment	$	24
Goodwill		331
FCC licensses		5,600
Total purchase price	$	5,955

The WNOX-FM broadcast license expires in 2020.  We expect to renew the license without issue.  The goodwill and broadcast licenses which we acquired are not subject to amortization for financial reporting purposes, but are expected to be entirely deductible for income tax purposes.

The acquisition was accounted for using the purchase method.  The operating results and cash flows of the acquired business are included in our consolidated financial statements from May 3, 2013, the effective date we acquired control of WNOX-FM.

On October 4, 2013, our broadcasting business, agreed to the sale of stations KMIR-TV and My 13 KPSE-TV in Palm Springs, California to OTA Broadcasting, LLC, an affiliate of Virginia based OTA Broadcasting, LLC for $17,000 in cash and certain other contingent considerations.  The transaction closed effective January 1, 2014.  We expect to record a pre-tax book gain of $10,200 in the first quarter of 2014.

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2012

On June 25, 2012, our broadcasting business completed the asset purchase of KHTT-FM and KBEZ-FM in Tulsa, Oklahoma from Renda Broadcasting Corporation for $11,728 in cash.  We now own five radio stations in Tulsa, Oklahoma.

The goodwill of $1,947 arising from the acquisition is attributable to the synergies expected from aligning our radio stations in a cluster within the Tulsa, Oklahoma market.  The purchase of KTTT-FM and KBEZ-FM builds our existing Tulsa, Oklahoma cluster, and creates a strong group that will continue to serve our listeners, customers and the entire Tulsa, Oklahoma community, and enhances our scale in this existing market. This clustering strategy has allowed us to target our stations’ formats and sales efforts to better serve advertisers and listeners as well as leverage operating expenses to maximize the performance of each station and the cluster.

The estimated fair values of identifiable assets acquired and liabilities assumed for KHTT-FM and KBEZ-FM at the acquisition date are as follows:

	KHTT-FM and KBEZ-FM
	Tulsa, OK
Property and equipment	$	181
Goodwill		1,947
Broadcast licenses		9,600
Total purchase price	$	11,728

The KBEZ-FM broadcast license expires in 2021. The KHTT-FM broadcast license renewal application was timely filed and remains pending. The current term was until 2013. We expect to renew both licenses without issue.  The goodwill and broadcast licenses which we acquired are not subject to amortization for financial reporting purposes, but are expected to be entirely deductible for income tax purposes.

The acquisition was accounted for using the purchase method.  The operating results and cash flows of the acquired business are included in our consolidated financial statements from March 26, 2012, the date we entered into the local marketing agreement with Renda Broadcasting Corporation.

We had an affiliation agreement with ACE TV, Inc. for the rights under a local marketing agreement for WACY-TV in Appleton, Wisconsin and to purchase certain assets of ACE TV, Inc. including the broadcast license of WACY-TV for a purchase price of $2,038.  On October 22, 2012, we closed on the purchase of the remaining assets used in the operation of WACY-TV from ACE TV, Inc.  See Note 8 “Variable Interest Entity.”

On December 3, 2012, our broadcasting business completed the sale of certain assets (including the FCC licenses) of WKTI-AM in Knoxville, Tennessee for $65.  We recorded a pre-tax gain on the sale, net of transaction expenses, of $48.

On December 3, 2012, Journal Community Publishing Group, Inc., our community publications business, completed the sale of Hodag Buyers’ Guide, North Star Journal, Merrill Foto News, Wausau Buyers’ Guide, Stevens Point Buyers’ Guide, Wood County Buyers’ Guide, Waupaca Buyers’ Guide, Waupaca County Post East, Waupaca County Post West, Clintonville Shoppers’ Guide, New London Buyers’ Guide, Silent Sports, Waupacanow.com, Merrillfotonews.com, Starjournalnow.com, Silentsports.net, Wibuyersguide.com and a single copy distribution network based in Rhinelander, WI for $1,200 in cash and a promissory note of $772.  We recorded a pre-tax loss on the sale, net of transaction expenses, of $319.

On December 6, 2012, our broadcasting business completed the acquisition of NewsChannel 5 Network, LLC from a subsidiary of Landmark Media Enterprises, LLC in Nashville, Tennessee.  The purchase price was $220,000 including a working capital adjustment of $5,000.

NewsChannel 5 Network, LLC contributed revenue of $2,917 and earnings from continuing operations before taxes of $1,730 for the period from December 7, 2012 to December 30, 2012.  The following unaudited pro forma information presents the combined results of operations of Journal and NewsChannel 5 Network, LLC as if the acquisition of NewsChannel 5 Network, LLC had occurred on December 27, 2010:

	2012		2011
Pro Forma Results of Operations
Revenue	$	439,732	$	399,313
Earnings per share from continuing operations, diluted	$	0.71	$	0.47

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10 ACQUISITIONS AND DIVESTITURES continued

The unaudited pro forma results reflect certain adjustments related to the acquisition, such as increased depreciation and amortization expense resulting from the fair valuation of assets acquired and the impact of financing the acquisition.  The pro forma results exclude any planned revenue or cost synergies or other effects of the planned integration of NewsChannel 5 Network, LLC.  The pro forma results are for comparative purposes only and may not be indicative of the results that would have occurred if we had completed this acquisition as of the periods shown above or the results that will be attained in the future.

The goodwill of $114,677 arising from the acquisition is attributable to significant tax deductions we expect to realize related to the step up in basis of certain assets that will provide cash tax savings and, to a lesser extent, certain revenue and cost synergies expected to be realized.

The fair values of identifiable assets acquired and liabilities assumed for NewsChannel 5 Network, LLC at the acquisition date are as follows:

	NewsChannel 5
Tangible assets	$	13,383
Long-term assets, other		48
Working capital		8,292
Network affiliation agreements		43,500
FCC licenses		40,100
Goodwill		114,677
Total purchase price	$	220,000

The goodwill and broadcast licenses which we acquired are not subject to amortization for financial reporting purposes, but are expected to be entirely deductible for income tax purposes.

Acquisition related costs with respect to the foregoing transactions were $2,152 and $3,145 for the fourth quarter ended and four quarters ended December 30, 2012, respectively, and are included in selling and administrative expenses in the condensed consolidated statements of operations.

The acquisition has been accounted for under the acquisition method of accounting which requires the total purchase price to be allocated to the assets acquired and liabilities assumed based on their estimated fair values.  The excess purchase price over the amounts assigned to tangible and intangible assets acquired and liabilities assumed is recognized as goodwill.  The operating results and cash flows of the acquired business are included in our consolidated financial statements from December 7, 2012, the effective date we acquired control of NewsChannel 5 Network, LLC.

2011

In June 2011, Journal Community Publishing Group, Inc., our community publications business, completed the sale of Pelican Press and Pelican Press Marketplace businesses, which operated in Sarasota, Florida, for $502.  We recorded a pre-tax gain on the sale, net of transaction expenses, of $245.  In August 2011, Journal Community Publishing Group, Inc. completed the sale of the remaining Florida-based community publications businesses for aggregate consideration of $757.  The publications and web-sites included Florida Mariner, Clay Today, Clay County Leader, Ponte Vedra Recorder, St. Augustine Underground, First Coast Register and Car Connection, and were distributed in the Clay, St. John’s and Duval, Florida counties.  We recorded a total pre-tax gain on the sales, net of transaction expenses, of $253.  These sales allow us to focus our efforts on operating our Wisconsin-based community publications businesses.

11 DISCONTINUED OPERATIONS

KMIR-TV and My 13 KPSE-TV

On October 4, 2013, our broadcasting business, agreed to the sale of stations KMIR-TV and My 13 KPSE-TV in Palm Springs, California to OTA Broadcasting, LLC, an affiliate of Virginia based OTA Broadcasting, LLC for $17,000 in cash and certain other contingent considerations.  The transaction closed effective January 1, 2014.  We expect to record a pre-tax book gain of $10,200 in the first quarter of 2014.

The following table summarizes Palm Spring’s revenue and earnings before income taxes as reported in earnings (loss) from discontinued operations, net of applicable income taxes in the consolidated statements of operations for all periods presented:

Years ended December 29, December 30 and December 25	2013			2012		2011
Revenue	$	5,483		$	6,924	$	5,341
Earnings (loss) before income taxes	$	(62	)	$	1,262	$	240

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The following table presents the aggregate carrying amounts of the major classes of assets divested:

Assets:
Cash and cash equivalents	$	1
Receivables, net		1,149
Prepaid expenses and other current assets		11
Program and barter rights		620
Deferred income taxes		713
Property and equitment, net		1,852
Network affiliations, net		1,935
Income tax receivable		767
Total assets	$	7,048
Liabilities:
Accounts payable	$	37
Accrued compensation		133
Deferred revenue		57
Syndicated programs		640
Other current liabilities		18
Total liabilities	$	885

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 (loss) from discontinued operations, net of applicable income taxes in the consolidated statements of operations for all periods presented:

	2013		2012		2011
Years ended December 29, December 30 and December 25
Revenue	$	-	$	-	$	-
Earnings before income taxes	$	-	$	-	$	562

12 WORKFORCE REDUCTION

During 2013, we recorded a pre-tax charge of $863 for workforce separation benefits across our broadcasting and publishing businesses.  Of the costs recorded for the year ended December 29, 2013, $698 is included in publishing operating costs and expenses, and $165 is included in selling and administrative expenses.  We expect payments to be completed during the first half of 2014.  In 2013, the number of full-time and part-time employees increased by approximately 5.2% compared to 2012.

Activity associated with workforce reductions during the years ended December 29, 2013 and December 30, 2012 was as follows:

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	Balance as of		Charge for		Payments for			Balance as of
	December 30, 2012		Separation Benefits		Separation Benefits			December 29, 2013
	(dollars in millions)
Broadcasting	$	-	$	56	$	(13	)	$	43
Publishing	$	809		807		(1,286	)	$	330
Total	$	809	$	863	$	(1,299	)	$	373
	Balance as of		Charge for		Payments for			Balance as of
	December 25, 2011		Separation Benefits		Separation Benefits			December 30, 2012
	(dollars in millions)
Publishing	$	1,780	$	1,655	$	(2,626	)	$	809
Total	$	1,780	$	1,655	$	(2,626	)	$	809

13 RELATED PARTY TRANSACTIONS

On August 13, 2012, we repurchased all 3,264 outstanding shares of our class C common stock, all of which were held by Matex Inc., members of the family of our former chairman Harry J. Grant, trusts for the benefit of members of the family, and Proteus Fund, Inc., a non-profit organization.  Pursuant to the terms of the agreement, we paid $6,246 in cash and issued 15 unsecured subordinated promissory notes with an aggregate principal amount of $25,599. The notes bear interest at a rate of 7.25% per annum and interest is payable quarterly. Six of the subordinated notes, with an aggregate principal amount of approximately $9,664, were paid on September 21, 2012 for $1,340 and December 21, 2012 for $8,324.  One of the subordinated notes, with an aggregate principal amount of $2,000, which was due on July 15, 2013, was also prepaid without premium or penalty on December 21, 2012.  On September 30, 2013, we paid the first annual installment on the remaining eight subordinated notes.  After giving effect to this $2,655 installment payment, the remaining aggregate principal amount of these eight subordinated notes is approximately $13,279.  The remaining subordinated notes are payable in equal annual installments on September 30 of each of 2014, 2015, 2016, 2017 and 2018, with no prepayment right.  Interest on the notes is payable quarterly.  One of the remaining subordinated notes, with an original principal amount of $7,617, was issued to the Judith Abert Meissner Marital Trust, a beneficial owner of more than 5.00% of the issued and outstanding shares of our class B common stock.  David G. Meissner, a former member of the Board, who did not stand for reelection to the Board of Directors at the 2013 Annual Meeting of Shareholders, is a beneficiary and trustee of this trust.  An additional three of the remaining subordinated notes, with an original aggregate principal amount of $752, were originally issued to trusts for the benefit of Mr. Meissner’s children in which Mr. Meissner serves or previously served as trustee.  The cash for the repurchase to the Judith Abert Meissner Marital Trust and the trusts for the benefit of Mr. Meissner’s children in which Mr. Meissner serves or previously served as trustee was $2,042.

14 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) broadcasting; (ii); publishing and (iii) corporate. Our broadcasting segment consists of 13 television stations and 35 radio stations in 11 states.  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 publications in Wisconsin. Our corporate segment consists of unallocated corporate expenses and revenue eliminations.

Our “Corporate” segment reflects unallocated costs primarily related to corporate executive management and corporate governance.

On January 22, 2014, our broadcasting business changed its organizational structure to reflect the group’s focus on its two primary businesses:  Television and Radio.  As of March 30, 2014, we will report Television, Radio, Publishing and Corporate segments.

84

14 SEGMENT REPORTING continued

	2013			2012			2011
Revenue
Broadcasting	$	243,432		$	228,703		$	180,739
Publishing		154,558			164,947			170,976
Corporate		(723	)		(532	)		(263	)
	$	397,267		$	393,118		$	351,452
Operating earnings (loss)
Broadcasting	$	45,412		$	54,967		$	30,761
Publishing		13,778			11,622			15,901
Corporate		(7,874	)		(7,858	)		(7,120	)
	$	51,316		$	58,731		$	39,542
Broadcast license impairment
Broadcasting	$	-		$	1,616		$	735
Publishing		-			-			-
Corporate		-			-			-
	$	-		$	1,616		$	735
Depreciation and amortization
Broadcasting	$	15,194		$	12,201		$	11,608
Publishing		7,058			9,170			10,412
Corporate		661			667			622
	$	22,913		$	22,038		$	22,642
Capital expenditures
Broadcasting	$	9,868		$	10,319		$	8,460
Publishing		2,498			1,240			987
Corporate		74			746			1,143
	$	12,440		$	12,305		$	10,590

	2013		2012
Identifiable total assets
Broadcasting	$	467,505	$	475,997
Publishing		96,991		103,360
Corporate & discontinued operations		31,522		46,446
	$	596,018	$	625,803

85

15 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	2013
	First		Second		Third		Fourth		Total
Revenue	$	93,204	$	99,778	$	96,919	$	107,366	$	397,267
Gross profit		40,801		45,411		40,277		51,541		178,030
Net earnings		3,793		6,602		4,546		11,260		26,201
Earnings per share
Basic - class A and B common stock		0.08		0.13		0.09		0.22		0.52
Diluted - class A and B common stock		0.08		0.13		0.09		0.22		0.52
						2012
	First		Second		Third		Fourth		Total
Revenue	$	80,673	$	94,068	$	96,219	$	122,158	$	393,118
Gross profit		33,013		45,573		43,906		65,377		187,869
Net earnings		2,919		7,611		7,698		15,097		33,325
Earnings per share
Basic - class A and B common stock		0.05		0.13		0.14		0.30		0.61
Diluted - class A and B common stock		0.05		0.13		0.14		0.30		0.61
Basic and diluted - class C common stock		0.19		0.28		0.15		-		0.74

The first quarter of 2013 includes a pre-tax charge of $32 for separation benefits at our publishing business.  The second quarter of 2013 includes a pre-tax charge of $716 for separation benefits at our broadcasting and publishing businesses.  The third quarter of 2013 includes a pre-tax charge of $80 for separation benefits at our broadcasting and publishing businesses. The fourth quarter of 2013 includes a pre-tax charge of $35 for separation benefits at our broadcasting and publishing businesses.

The first quarter of 2012 includes a pre-tax charge of $38 for separation benefits at our publishing business.  The second quarter of 2012 includes a pre-tax charge of $1,035 for separation benefits at our publishing business.  The third quarter of 2012 includes a pre-tax charge of $553 for separation benefits at our publishing business and a pre-tax long-lived asset impairment charge of $493.  The fourth quarter of 2012 includes a pre-tax broadcast license impairment charge of $1,616, a pre-tax loss of $319 on the sale of our northern Wisconsin community publications and a pre-tax charge of $29 for separation benefits at our publishing business.

16 ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in accumulated other comprehensive loss by component, net of tax, is as follows:

	Defined Benefit Pension and Postretirement Plans			Total
Balance as of December 30, 2012	$	(55,739	)	$	(55,739	)
Net actuarial gain and amounts reclassified from accumulated other comprehensive loss		16,085			16,085
Net other comprehensive income (loss)		16,085			16,085
Balance as of December 29, 2013	$	(39,654	)	$	(39,654	)

The reclassification of accumulated other comprehensive loss is as follows:

	Amount Reclassified from Accumulated Other Comprehensive Loss
	2013
Amortization of defined benefit pension and postretirement plan items:
Prior service cost and unrecognized loss	$	(2,558	)
Income tax expense		10,176
Net actuarial (Gain)		(23,703	)
Total reclassifications	$	(16,085	)

(1) These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement cost.  See Note 3 “Employee Benefit Plans” for more information.  Of the costs for the year ended December 29, 2013, $439 is included in broadcasting operating costs and expenses, $1,163 is included in publishing operating costs and expenses, and $956 is included in selling and administrative expenses.

86

17 SUBSEQUENT EVENTS

Effective January 1, 2014, our broadcasting business closed on the sale of television stations KMIR-TV and My 13 KPSE TV in Palm Springs, California to OTA Broadcasting, LLC, an affiliate of Virginia-based OTA Broadcasting, LLC, for $17,000 in cash and certain other contingent considerations.  We expect to record a pre-tax book gain of $10,200 in the first quarter of 2014.

87

On January 22, 2014, our broadcasting business changed its organizational structure to reflect the group’s focus on its two primary businesses:  Television and Radio.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Journal Communications, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, equity and cash flows present fairly, in all material respects, the financial position of Journal Communications, Inc. and its subsidiaries at December 29, 2013 and December 30, 2012, and the results of  their operations and their cash flows for each of the three years in the period ended December 29, 2013 in conformity with accounting principles generally accepted in the United States of America.  In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 29, 2013, based on criteria established in Internal Control - Integrated Framework (1992)  issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.  Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.  Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other procedures as we considered necessary in the circumstances.  We believe that our audits provide a reasonable basis for our opinions.

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

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

/s/ PricewaterhouseCoopers LLP

New York, New York

March 10, 2014

88

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

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

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

Management’s Report on Internal Control over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).  Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework).  Based on our evaluation under this framework, our management concluded that our internal control over financial reporting was effective as of December 29, 2013.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited our internal control over financial reporting as of December 29, 2013, as stated in their report which is included in Item 8 hereto.

ITEM 9B. OTHER INFORMATION

None.

89

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information contained under the headings “Election of Directors” and “Other Matters-Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement for our May 6, 2014 Annual Meeting of Shareholders is incorporated by reference herein.  Reference is also made to the information under the heading “Executive Officers of the Registrant” included under Part I of this Annual Report on Form 10-K.

We have adopted a Code of Ethics for Financial Executives that applies to our Chief Executive Officer and senior financial and accounting officers and employees.  We have also adopted a Code of Ethics, applicable to all employees, and a Code of Conduct and Ethics for Members of the Board of Directors, applicable to all directors, which together satisfy the requirements of the New York Stock Exchange regarding a “code of business conduct.”  Finally, we have adopted Corporate Governance Guidelines addressing the subjects required by the New York Stock Exchange.  We make copies of the foregoing, as well as the charters of our Board committees, available free of charge on our website at www.journalcommunications.com.  We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, our Code of Ethics for Financial Executives by posting such information on our web site at the address stated above.  We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

The information contained under the headings “Director Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report” and “Executive Compensation,” in the Proxy Statement for our May 6, 2014 Annual Meeting of Shareholders is incorporated by reference herein.

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

The information contained under the headings “Stock Ownership of Management and Others” in the Proxy Statement for our May 6, 2014 Annual Meeting of Shareholders is incorporated by reference herein.

Equity Compensation Plan Information

The following table gives information about our common stock that may be issued under all of our equity compensation plans as of December 29, 2013.

	Number of Securities					Future Issuance Under
	to be Issued Upon			Weighted-Average		Equity Compensation
	Exercise of Outstanding			Exercise Price of		Plans (excluding
	Options, Warrants			Outstanding Options,		securites reflected in
	and Rights			Warrants and Rights		Column (a))
Plan Category	(a)			(b)		(c)
Equity compensation plans approved by security holders (2003 Plan)		525,578	(1)	$	14.73		N/A	(1)
Equity compensation plans approved by security holders (2007 Plan)		216,629	(2)	$	9.83		4,497,317	(3)
Equity compensation plans not approved by security holders		-		$	-		-
Total		742,207		$	13.30		4,497,317

(1) Represents options to purchase shares of class B common stock and stock appreciation rights (SARs) to receive amounts equal to the excess of fair value of shares of class B common stock over the base value of each SAR under our 2003 Equity Incentive Plan (2003 Plan).  No further awards will be granted under our 2003 Plan.

(2) Represents SARs to receive amounts equal to the excess of fair value of shares of class B common stock over the base value of each SAR under our 2007 Journal Communications, Inc. Omnibus Incentive Plan (2007 Plan).

(3) Represents 2,334,973 shares available for issuance under our 2007 Plan, all of which may be issued in the form of nonstatutory or incentive stock options, SARs, restricted stock, restricted or deferred stock units, performance awards, dividend equivalents and other stock-based awards.  Also includes 2,162,344 shares available for issuance under our Employee Stock Purchase Plan.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information contained under the headings “Election of Directors” and “Certain Transactions” in the Proxy Statement for our May 6, 2014 Annual Meeting of Shareholders is incorporated by reference herein.

ITEM 14. PRINICIPAL ACCOUNTING FEES AND SERVICES

The information contained under the heading “Independent Registered Public Accounting Firm Disclosure” in the Proxy Statement for our May 6, 2014 Annual Meeting of Shareholders is incorporated by reference herein.

90

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Financial Statements, Financial Statement Schedule and Exhibits

		Form 10-K Page(s)
(1)	Financial Statements
	Consolidated Balance Sheets at December 29, 2013 and December 30, 2012	54
	Consolidated Statements of Operations for each of the three years in the period ended December 29, 2013	55
	Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 29, 2013	56
	Consolidated Statements of Equity for each of the three years in the period ended December 29, 2013	57
	Consolidated Statements of Cash Flows for each of the three years in the period ended December 29, 2013	58
	Notes to Consolidated Financial Statements	59
	Report of Independent Registered Public Accounting Firms	88
(2)	Financial Statement Schedule for the years ended December 29, 2013, December 30, 2012 and December 25, 2011
	II – Consolidated Valuation and Qualifying Accounts	92

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

(3) Exhibits

The exhibits listed on the accompanying “Index to Exhibits” (on pages 91 to 94) are filed, or incorporated by reference, as part of this Annual Report on Form 10-K.

91

JOURNAL COMMUNICATIONS, INC.

SCHEDULE II ‑ CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

Years ended December 29, 2013, December 30, 2012 and December 25, 2011

(dollars in thousands)

	Balance at		Additions		Additions									Balance at
	Beginning		Charged to		Charged to		Other Additions							End
Description	of Year		Expense		Revenue		(Deductions)				Deductions			of Year
Accounts receivable allowances:
2013	$	2,377	$	314	$	2,042	$	-			$	3,045	(3)	$	1,688
2012	$	1,811	$	503	$	1,964	$	346		(1)	$	2,247	(3)	$	2,377
2011	$	3,113	$	779	$	2,577	$	(1,105	)	(2)	$	3,553	(3)	$	1,811
Deferred income taxes
Valuation allowances on state net operating loss and tax credit carryforwards:
2013	$	199	$	-	$	-	$	-			$	15	(5)	$	184
2012	$	57	$	-	$	-	$	195		(4)	$	53	(5)	$	199
2011	$	116	$	-	$	-	$	-			$	59	(5)	$	57

(1) Includes write off of accounts receivable against the allowance for doubtful accounts of $15 related to the northern Wisconsin community publications sold in 2012, and the addition of $361 related to the NewsChannel 5 Network, LLC purchase in 2012.

(2) Includes write off of accounts receivable against the allowance for doubtful accounts of $1,105 related to IPC Print Services, Inc.

(3) Deductions from the accounts receivable written off, less recoveries, against the allowances.

(4) Includes state net operating loss and tax credit carryforwards related to the northern Wisconsin community publications sold in 2012.

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

92

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned, hereunto duly authorized on March 10, 2014.

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on March 10, 2014:

/s/ Steven J. Smith

Steven J. Smith, Chairman of the Board &

Chief Executive Officer

(Principal Executive Officer)

/s/ Andre J. Fernandez

Andre J. Fernandez, President & Chief

Financial Officer

(Principal Financial Officer)

/s/ Jason R. Graham

Jason R. Graham, Senior Vice President of Finance & Controller

(Principal Accounting Officer)

/s/ David J. Drury

David J. Drury, Director

/s/ Jonathan Newcomb

Jonathan Newcomb, Director

/s/ Mary Ellen Stanek

Mary Ellen Stanek, Director

/s/ Owen J. Sullivan

Owen J. Sullivan, Director

/s/ Jeanette Tully

Jeanette Tully, Director

/s/ Dean Blythe

Dean Blythe, Director

93

JOURNAL COMMUNICATIONS, INC.

INDEX TO EXHIBITS

Exhibit Number	Description
(2)	Purchase Agreement, dated as of August 31, 2012, by and among Landmark Television, LLC and Journal Broadcast Group, Inc., and joined for certain limited purposes by Journal Broadcast Corporation, Journal Communications, Inc. and Landmark Media Enterprises, LLC [Schedules, exhibits and annexes to this document are not being filed herewith.  The registrant agrees to furnish supplementally a copy of any such schedule, exhibit or annex to the Securities and Exchange Commission upon request.] (incorporated by reference to Exhibit 2 to Journal Communications, Inc.’s Current Report on Form 8-K dated August 31, 2012 [Commission File No. 1-31805]).
(3.1)	Amended and Restated Articles of Incorporation of Journal Communications, Inc., as amended through June 30, 2006 (incorporated by reference to Exhibit 3.2 to Journal Communications, Inc.’s Current Report on Form 8-K dated June 30, 2006 [Commission File No. 1-31805]).
(3.2)	Bylaws of Journal Communications, Inc., as amended May 7, 2013 (incorporated by reference to Exhibit 3.2 to Journal Communications, Inc.’s Current Report on Form 8-K dated May 7, 2013 [Commission File No. 1-31805]).
(4.1)	Second Amended and Restated Credit Agreement, dated as of December 5, 2012, among Journal Communications, Inc., certain subsidiaries thereof, the several lenders party thereto, U.S. Bank National Association, as administrative agent, and Sun Trust Bank and Bank of America, N.A., as co-syndication agents (incorporated by reference to Exhibit 4 to Journal Communications, Inc.’s Current Report on Form 8-K dated December 5, 2012 [Commission File No. 1-31805]).
(4.2)	Shareholders Agreement, dated as of May 12, 2003, by and among Journal Communications, Inc. (then known as The Journal Company), The Journal Company (then known as Journal Communications, Inc.), Matex Inc. and the Abert Family Journal Stock Trust, as further executed by two “Family Successors,” Grant D. Abert and Barbara Abert Tooman (incorporated by reference to Exhibit 4.3 to Journal Communications, Inc.’s Registration Statement on Form S-1 filed on June 19, 2003 [Reg. No. 333-105210]).
(4.3)	Amendment to Shareholders Agreement, dated as of August 2, 2007, by and among Journal Communications, Inc., The Journal Company, Matex Inc., the Abert Family Journal Stock Trust, Grant D. Abert and Barbara Abert Tooman (incorporated by reference to Exhibit 4.2 to Journal Communications, Inc.’s Current Report on Form 8-K dated August 22, 2007 [Commission File No. 1-31805]).
(4.4)	Second Amendment to Shareholders Agreement, dated as of August 12, 2012, by and among Journal Communications, Inc., Matex Inc., Grant D. Abert, Barbara Abert Tooman, the Judith Abert Meissner Marital Trust, the Judith Abert Meissner Family Trust f/b/o Donald C. Meissner, the Judith Abert Meissner Family Trust f/b/o Linda B. Meissner, the Meissner 1999 Stock Trusts, Donald C. Meissner, Linda B. Meissner, Robin D. Abert, Corin A. Abert, the Robin D. Abert 2004 Trust u/a/d December 30, 2004 and Proteus Fund, Inc. (incorporated by reference to Exhibit 4.3 to Journal Communications, Inc.’s Current Report on Form 8-K dated August 12, 2012 [Commission File No. 1-31805]).
(10.1)	Journal Communications, Inc. Annual Management Incentive Plan, amended and restated as of February 9, 2009 (incorporated by reference to Exhibit 10.2 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 25, 2011 [Commission File No. 1-31805]).*
(10.2)	Journal Communications, Inc. Non-Qualified Deferred Compensation Plan, amended and restated effective January 1, 2008 (incorporated by reference to Exhibit 10.1 to Journal Communications, Inc.’s Current Report on Form 8-K dated December 12, 2007 [Commission File No. 1-31805]).*
(10.3)	Journal Communications, Inc. Supplemental Benefit Plan, amended and restated as of January 1, 2008  (incorporated by reference to Exhibit 10.3 to Journal Communications, Inc.’s Current Report on Form 8-K dated December 12, 2007 [Commission File No. 1-31805]).*
(10.4)	Journal Communications, Inc. 2003 Employee Stock Purchase Plan, as amended and restated through December 8, 2009 (incorporated by reference to Exhibit 10.6 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 27, 2009 [Commission File No. 1-31805]).*

94

(10.5)	Journal Communications, Inc. 2003 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.5 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 26, 2004 [Commission File No. 1-31805]).*
(10.6)	Amendment to the Journal Communications, Inc. 2003 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to Journal Communications, Inc.’s Current Report on Form 8-K dated February 13, 2007 [Commission File No. 1-31805]).*
(10.7)	Form of Stock Appreciation Rights Agreement for Fixed Price Stock Appreciation Rights under the Journal Communications, Inc. 2003 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to Journal Communications, Inc.’s Current Report on Form 8-K dated February 13, 2007 [Commission File No. 1-31805]).*
(10.8)	Form of Stock Appreciation Rights Agreement for Escalating Price Stock Appreciation Rights under the Journal Communications, Inc. 2003 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to Journal Communications, Inc.’s Current Report on Form 8-K dated February 13, 2007 [Commission File No. 1-31805]).*
(10.9)	Amended and Restated Employment Agreement, as amended and restated effective as of December 15, 2010, between Journal Communications, Inc. and Steven J. Smith (incorporated by reference to Exhibit 10.1 to Journal Communications, Inc.’s Current Report on Form 8-K dated December 15, 2010 [Commission File No. 1-31805]).*
(10.10)	Amendment to Amended and Restated Employment Agreement, effective as of March 19, 2012, between Journal Communications, Inc. and Steven J. Smith (incorporated by reference to Exhibit 10.1 to Journal Communications, Inc.’s Quarterly Report on Form 10-Q for the period ended March 25, 2012 [Commission File No. 1-31805]).*
(10.11)	Change in Control Agreement, as amended and restated effective as of October 11, 2010 between Journal Communications, Inc. and Elizabeth Brenner (incorporated by reference to Exhibit 10.1 to Journal Communications, Inc.’s Quarterly Report on Form 10-Q for the period ended September 26, 2010 [Commission File No. 1-31805]).*
(10.12)	Change in Control Agreement, as amended and restated effective as of October 11, 2010 between Journal Communications, Inc. and Mary Hill Taibl (incorporated by reference to Exhibit 10.2 to Journal Communications, Inc.’s Quarterly Report on Form 10-Q for the period ended September 26, 2010 [Commission File No. 1-31805]).*
(10.13)	Change in Control Agreement, as amended and restated effective as of October 11, 2010 between Journal Communications, Inc. and Andre J. Fernandez (incorporated by reference to Exhibit 10.1 to Journal Communications, Inc.’s Current Report on Form 8-K dated October 11, 2010 [Commission File No. 1-31805]).*
(10.14)	Journal Communications, Inc. 2007 Omnibus Incentive Plan, as amended and restated effective February 7, 2011 (incorporated by reference to Exhibit 10.24 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 26, 2010 [Commission File No. 1-31805]).*
(10.15)	Form of Time-Based Restricted Stock Award Certificate, with dividends that accrue until vesting, under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.25 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 26, 2010 [Commission File No. 1-31805]).*
(10.16)	Form of Time-Based Restricted Stock Award Certificate, with dividends payable prior to vesting, under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.26 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 26, 2010 [Commission File No. 1-31805]).*
(10.17)	Form of Fixed-Price Stock Appreciation Rights Award Certificate under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.27 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 26, 2010 [Commission File No. 1-31805]).*
(10.18)	Form of Escalating Price Stock Appreciation Rights Award Certificate under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.28 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 26, 2010 [Commission File No. 1-31805]).*
(10.19)	Form of Non-Statutory Stock Option Award Certificate under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.29 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 26, 2010 [Commission File No. 1-31805]).*

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(10.20)	Form of Fully Vested Stock Award Notice under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 4.7 to Journal Communications, Inc.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on May 22, 2007 (Reg. No. 333-143146)).*
(10.21)	Form of Stock Settled Stock Appreciation Award Certificate under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.22 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 25, 2011 [Commission File No. 1-31805]).*
(10.22)	Form of Stock Settled Stock Appreciation Award Certificate with Retirement Accelerated under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.33 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 25, 2011 [Commission File No. 1-31805]).*
(10.23)	Form of Performance Unit Award Certificate under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to Journal Communications, Inc.’s Quarterly Report on Form 10-Q for the period ended March 25, 2012 [Commission File No. 1-31805]).*
(10.24)	Form of Performance Unit Award Certificate with Retirement Acceleration under the Journal Communications, Inc. 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.3 to Journal Communications, Inc.’s Quarterly Report on Form 10-Q for the period ended March 25, 2012 [Commission File No. 1-31805]).*
(10.25)	Journal Communications, Inc. Non-Employee Director Compensation Policy, as amended February 12, 2013.  (incorporated by reference to Exhibit 10.25 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 30, 2012 [Commission File No. 1-31805]).*
(10.26)	Journal Communications, Inc. Compensation Recoupment Policy, effective as of January 1, 2011 (incorporated by reference to Exhibit 10.2 to Journal Communications, Inc.’s Current Report on Form 8-K dated December 15, 2010 [Commission File No. 1-31805]).
(10.27)	Journal Communications, Inc. Internal Policy on Administration and Accounting for Stock Options, Restricted Stock and Other Equity Awards, as amended and restated as of July 12, 2011.  (incorporated by reference to Exhibit 10.27 to Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 30, 2012 [Commission File No. 1-31805]).*
(21)	Subsidiaries of the Registrant.
(23)	Consent of Independent Registered Public Accounting Firm.
(31.1)	Certification by Steven J. Smith, Chairman and Chief Executive Officer of Journal Communications, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.2)	Certification by Andre J. Fernandez, President and Chief Financial Officer of Journal Communications, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)	Certification of Steven J. Smith, Chairman and Chief Executive Officer and Andre J. Fernandez, President and Chief Financial Officer of Journal Communications, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99.1)	Proxy Statement for the May 6, 2014 Annual Meeting of Shareholders of Journal Communications, Inc. (Except to the extent specifically incorporated by reference, the Proxy Statement for the May 6, 2014 Annual Meeting of Shareholders shall not be deemed to be filed with the Securities and Exchange Commission as part of this Annual Report on Form 10-K.)
(101)	The following materials from Journal Communications, Inc.’s Annual Report on Form 10-K for the period ended December 29, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at December 29, 2013 and December 30, 2012; (ii) the Consolidated Statements of Operations for each of the three years in the period ended December 29, 2013; (iii) Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 29, 2013; (iv) the Consolidated Statements of Equity for each of the three years in the period ended December 29, 2013; (v) the Consolidated Statements of Cash Flows for each of the three years in the period ended December 29, 2013; and (vi) Notes to Consolidated Financial Statements, furnished herewith.

* Denotes a management or compensatory plan or arrangement.

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