The following discussion of our financial condition and results of operations should be read together with our unaudited consolidated condensed financial statements for the third quarter and three quarters ended September 27, 2009, including the notes thereto.

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

Forward-Looking Statements

We make certain statements in this Quarterly Report on Form 10-Q (including the information that we incorporate by reference herein) that are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in that Act, and we are including this statement for purposes of those safe harbor provisions. These forward-looking statements generally include all statements other than statements of historical fact, including statements regarding our future financial position, business strategy, budgets, projected revenues and expenses, expected regulatory actions and plans and objectives of management for future operations. We often use words such as "may," "will," "intend," "anticipate," "believe," or "should" and similar expressions in this Quarterly Report on Form 10-Q to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control. These risks, uncertainties and other factors could cause actual results to differ materially from those expressed or implied by those forward-looking statements. Among such risks, uncertainties and other factors that may impact us are the following as well as those contained in Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year ended December 28, 2008:

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

· changes in newsprint prices and other costs of materials;

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

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

· the availability of quality broadcast programming at competitive prices;

· changes in network affiliation agreements;

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

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

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

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

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

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

· changes in interest rates;

· the outcome of pending or future litigation;

· energy costs;

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

· changes in general economic conditions.

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

Overview

Our business segments are based on the organizational structure used by management for making operating and investment decisions and for assessing performance. Our reportable business segments are: (i) publishing; (ii) broadcasting; (iii) printing services; and (iv) other. Our publishing segment consists of the Milwaukee Journal Sentinel, which serves as the only major daily newspaper for the Milwaukee metropolitan area, and more than 50 community newspapers and shoppers in Wisconsin and Florida. Our broadcasting segment consists of 33 radio stations and 13 television stations in 12 states and the operation of a television station under a local marketing agreement. Our interactive media assets include approximately 120 online enterprises that are associated with our publishing and broadcasting segments. We also provide a wide range of commercial printing services, including printing of publications, professional journals and documentation material, through our printing services segment. Our other segment consists of a direct marketing services business and corporate expenses and eliminations.

Over the past few years, fundamentals in the newspaper industry have deteriorated significantly. Continuing weakness in the automobile industry has resulted in a decline in automotive advertising. Reductions in retail and classified run-of-press (ROP) advertising (due in part to department store consolidation, weakened employment and real estate economics and a migration of advertising to the internet), circulation declines and online competition have also negatively impacted newspaper industry revenues. Additionally, the continued housing market downturn has adversely impacted the newspaper industry, including real estate classified advertising as well as the home improvement, furniture and financial services advertising categories. These conditions, coupled with a weak economy, continued in the third quarter of 2009.

Our publishing businesses continued to be challenged in the third quarter of 2009 due to the difficult economic environment and the secular and cyclical influences affecting the newspaper industry. We have seen advertisers reduce their advertising spending in virtually all revenue categories. In addition, due to the changing mix of revenue categories, frequency and placement of advertising in the newspaper and customer choices to reduce or eliminate the use of color in their ads, we have seen a decrease in the average rate per inch of advertising. Classified advertising revenue, specifically for employment, real estate and automotive, decreased in the third quarter of 2009 compared to the third quarter of 2008. Retail advertising also decreased in the third quarter of 2009 compared to the third quarter of 2008 with weakness in a number of consumer-driven categories, including the automotive, furniture and furnishings, health services, finance/insurance, home improvement, dining and entertainment, communications, food and department stores categories. Interactive revenue decreased at our publishing businesses in the third quarter of 2009 compared to the third quarter of 2008. In addition to the impact of the difficult economic environment, revenue from automotive online classifieds was negatively impacted by our daily newspaper's transition to a new franchise relationship with CarSoup.com. Our publishing businesses remained profitable in the third quarter of 2009 despite recording $3.7 million in workforce reduction charges. Notwithstanding these challenges, our publishing businesses continue to reduce their expense platforms to better align with a reduced revenue base. Total expenses decreased $12.6 million, or 21.5%, in the third quarter of 2009 compared to the third quarter of 2008 primarily due to a decrease of $6.5 million in payroll-related costs and a decrease of $3.5 million in newsprint and paper costs.

Revenues in the broadcast industry are derived primarily from the sale of advertising time to local, national and political and issue advertisers and to a lesser extent from barter, digital revenues, retransmission fees, network compensation and other revenues. 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. The broadcast industry continues to experience softness in television and radio advertising resulting from general economic pressure now impacting local and national economies, primarily in the automobile, housing and retail segments. Our broadcasting business also is affected by audience fragmentation as audiences have an increasing number of options to access news and other programming.

Revenue from broadcasting decreased in the third quarter of 2009 compared to the third quarter of 2008 due to decreases in local, national, political and issue and Olympic advertising revenue, partially offset by increases in retransmission and developmental revenue and revenue from the television stations acquired in 2008 and 2009. The difficult economic environment has negatively impacted our broadcasting advertising revenue across most categories, the most significant being our largest revenue category ­- automotive. The significant decline in automotive advertising negatively impacts our average unit rates even if our inventory sell-out levels are high. Our broadcasting business posted operating earnings of $3.7 million in the third quarter of 2009 compared to an operating loss of $29.1 million in the third quarter of 2008, which included a $38.8 million non-cash broadcast license impairment charge. Total expenses decreased $44.4 million, or 53.3%, in the third quarter of 2009 compared to the third quarter of 2008, primarily due to the non-cash broadcast license impairment charge in the third quarter of 2008. Our broadcasting business continues to reduce its expense platforms to reflect a reduced revenue base.

Revenue at our printing services business decreased in the third quarter of 2009 compared to the third quarter of 2008 primarily due to the effects of the difficult economic environment and the planned reduction in revenue from Dell Computer Corporation (Dell). Customers are reducing their print volumes, ceasing to print and/or are taking their printing needs out for bid in order to achieve lower pricing. Our printing services business recorded an operating loss in the third quarter of 2009 compared to operating earnings in the third quarter of 2008 primarily due to the impact from the decrease in revenue and an increase in bad debt expense, partially offset by a decrease in production and payroll-related costs. Revenue at our direct marketing services business decreased in the third quarter of 2009 compared to the third quarter of 2008 primarily due to a decrease in mailing services and postage revenue. Our direct marketing services business posted operating losses in the third quarter of 2009 and the third quarter of 2008 primarily due to the operating earnings impact of the decrease in revenue, partially offset by a decrease in production and payroll-related costs.

For all of our advertising-based businesses, we believe that when there is an improvement in the current economic environment, advertising revenue will begin to stabilize and eventually increase from its current level. We do not expect, however, that revenues at our daily newspaper will return to revenue levels reported in the last five years given the secular changes affecting the newspaper industry.

As we enter the fourth quarter of 2009, we expect our revenue will be down compared to the fourth quarter of 2008. We will continue to reduce costs and to pay down our debt.

Results of Operations

Third Quarter Ended September 27, 2009 compared to the Third Quarter Ended September 28, 2008

Our consolidated revenue in the third quarter of 2009 was $105.1 million, a decrease of $31.2 million, or 22.9%, compared to $136.3 million in the third quarter of 2008. Our consolidated operating costs and expenses in the third quarter of 2009 were $65.9 million, a decrease of $15.3 million, or 18.8%, compared to $81.2 million in the third quarter of 2008. Our consolidated selling and administrative expenses in the third quarter of 2009 were $35.5 million, a decrease of $7.8 million, or 17.9%, compared to $43.3 million in the third quarter of 2008. Broadcast license impairment was $38.8 million in the third quarter of 2008.

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 (loss) as a percent of total revenue for the third quarter of 2009 and the third quarter of 2008:

                                                          Percent of                     Percent of
                                                            Total                          Total
                                             2009          Revenue          2008          Revenue
                                                             (dollars in millions)
Revenue:
Publishing                                 $    46.5             44.2 %   $    59.5             43.6 %
Broadcasting                                    42.4             40.4          54.0             39.6
Printing services                               11.1             10.6          16.1             11.8
Other                                            5.1              4.8           6.7              5.0
Total revenue                                  105.1            100.0         136.3            100.0

Total operating costs and expenses              65.9             62.7          81.2             59.6
Selling and administrative expenses             35.5             33.8          43.3             31.8
Broadcast license impairment                      --               --          38.8             28.4
Total operating costs and expenses and
selling and administrative expenses            101.4             96.5         163.3            119.8
Total operating earnings (loss)            $     3.7              3.5 %   $   (27.0 )          (19.8 )%

In addition to the secular influences affecting the newspaper industry discussed above, the difficult economic environment negatively impacted our publishing, broadcasting and direct marketing services advertising revenue and commercial printing revenue in the third quarter of 2009.

In the newspaper industry, classified advertising has historically been the most sensitive to economic cycles because it is driven by the demand for employment, real estate transactions and automotive sales. Newspaper classified advertising also has been the most impacted by secular changes affecting the newspaper industry. Classified advertising continues to move away from printed products to online products. While we offer online products and seek to retain classified advertising, we face increasing competition for this business and are losing the benefit of a strong base of print classified advertising against which we can upsell online advertisements. Our publishing businesses experienced a 44.0% decrease in classified advertising revenue in the third quarter of 2009 compared to the third quarter of 2008. Retail advertising revenue decreased 21.1% in the third quarter of 2009 compared to the third quarter of 2008, primarily in consumer-driven categories. As consumers have less discretionary income, our advertisers are decreasing their spending on advertising. The most significant decreases were in the automotive, furniture and furnishings, health services, finance/insurance, home improvement, dining and entertainment, communications, food and department stores categories. Because of secular changes and the difficult economic environment affecting the newspaper industry, we are aligning our cost structure in the face of decreasing revenues.

At our broadcasting business, advertising revenue decreased in the third quarter across most categories, the most significant being our largest revenue category ­- automotive. Automotive advertising revenue decreased $4.3 million, or 41.4%, in the third quarter of 2009 compared to the third quarter of 2008 as the domestic automobile industry is experiencing an unprecedented decrease in automotive sales. 2009 is generally considered to be a non-election year and, while there will be some political and issue advertising revenue in 2009, we will experience a significant decrease in the political and issue advertising revenue category throughout the year in our comparisons to 2008. In the third quarter of 2009, political and issue advertising revenue decreased $2.9 million compared to the third quarter of 2008. This is part of the normal two-year advertising cycle which affects our television stations in particular. Olympic advertising revenue decreased $2.3 million due to the broadcast of the 2008 Summer Olympics on our NBC affiliates in the third quarter of 2008. Partially offsetting the decrease in advertising revenue, retransmission revenue increased $0.8 million in the third quarter of 2009 compared to the third quarter of 2008. These contracts will continue to generate incremental revenue through the remainder of 2009 and into the next several years. Developmental revenue increased $0.6 million in the third quarter of 2009 compared to the third quarter of 2008.

The decrease in printing services revenue was primarily due to the effects of the difficult economic environment. Revenue from printing publications and revenue from Dell and other computer-related customers decreased in the third quarter of 2009 compared to the third quarter of 2008. At our direct marketing services business, revenue from mailing services and postage decreased in the third quarter of 2009 compared to the third quarter of 2008 as the demand for direct marketing advertising continues to decrease.

The decrease in total operating costs and expenses was primarily due to the decrease in revenue, a decrease in payroll-related costs reflecting the savings from workforce reduction initiatives, a decrease in newsprint and paper costs and other production materials, and overall cost reduction initiatives. The decrease in selling and administrative expenses is primarily due to decreases in payroll-related costs reflecting the savings from workforce reduction initiatives, a decrease in bad debt expense, a gain on the sale of radio stations KGEM-AM and KCID-AM in Boise, Idaho and overall cost reduction initiatives as our businesses continue to reduce expense platforms in response to the decrease in revenue. We recorded total workforce reduction charges of $4.2 million the third quarter of 2009 compared to $3.9 million in the third quarter of 2008.

Our consolidated operating earnings in the third quarter of 2009 were $3.7 million compared to an operating loss of $27.0 million in the third quarter of 2008. The following table presents our operating earnings (loss) by segment for the third quarter of 2009 and the third quarter 2008:

                                              Percent of                   Percent of
                                                Total                        Total
                                              Operating                    Operating
                                   2009        Earnings        2008           Loss
                                                 (dollars in millions)

Publishing                        $  0.7             18.5 %   $   1.1             (4.2 )%
Broadcasting                         3.7             99.2       (29.1 )          108.0
Printing services                   (0.8 )          (20.4 )       0.8             (3.0 )
Other                                0.1              2.7         0.2             (0.8 )
Total operating earnings (loss)   $  3.7            100.0 %   $ (27.0 )          100.0 %

The increase in total operating earnings was primarily due to the $38.8 million non-cash broadcast license impairment charge in the third quarter of 2008 and decreases in total operating costs and expenses and selling and administrative expenses, partially offset by the decrease in revenue at our publishing, broadcasting, printing services and direct marketing services businesses.

Publishing

Revenue from publishing in the third quarter of 2009 was $46.5 million, a decrease of $13.0 million, or 21.8%, compared to $59.5 million in the third quarter of 2008. Operating earnings from publishing in the third quarter of 2009 were $0.7 million, a decrease of $0.4 million, or 40.3%, compared to $1.1 million in the third quarter of 2008.

The following table presents our publishing revenue by category and operating earnings for the third quarter of 2009 and the third quarter of 2008:

                                  2009                                           2008
                                 Community                                      Community
                   Daily        Newspapers                       Daily         Newspapers                     Percent
                 Newspaper      & Shoppers        Total        Newspaper       & Shoppers        Total         Change
                                                         (dollars in millions)
Advertising
revenue:
Retail          $      15.6     $       5.5     $    21.1     $      20.2     $        6.6     $    26.8          (21.1 )
Classified              5.7             1.4           7.1            11.1              1.5          12.6          (44.0 )
National                1.0              --           1.0             1.7               --           1.7          (43.1 )
Direct
Marketing               0.1              --           0.1             0.7               --           0.7          (88.2 )
Other                    --              --            --              --              0.1           0.1          (58.0 )
Total
advertising
revenue                22.4             6.9          29.3            33.7              8.2          41.9          (30.1 )
Circulation
revenue                12.9             0.5          13.4            12.9              0.3          13.2            1.8
Other revenue           3.1             0.7           3.8             3.5              0.9           4.4          (14.0 )
Total revenue   $      38.4     $       8.1     $    46.5     $      50.1     $        9.4     $    59.5          (21.8 )

Operating
earnings        $       0.1     $       0.6     $     0.7     $       0.9     $        0.2     $     1.1          (40.3 )

Advertising revenue accounted for 63.0% of total publishing revenue in the third quarter of 2009 compared to 70.5% in the third quarter of 2008. The difficult economic environment and ongoing secular changes in the newspaper industry have caused advertisers to decrease their advertising spending across all of our advertising revenue categories. In addition, due to the changing mix of revenue categories, frequency and placement of advertising in the newspaper and customer choices to reduce or eliminate the use of color in their ads, we have seen a decrease in the average rate per inch of advertising.

Retail advertising revenue in the third quarter of 2009 was $21.1 million, a decrease of $5.7 million, or 21.1%, compared to $26.8 million in the third quarter of 2008. The $4.6 million decrease at our daily newspaper was primarily due to a decrease in ROP and preprint advertising in consumer-driven categories. As consumers have less discretionary income, advertisers are decreasing their spending. The most significant decreases were in the automotive, furniture and furnishings, health services, finance/insurance, home improvement, dining and entertainment, communications, food and department stores categories. The same trends persisted in our community newspapers and shoppers business. A $1.7 million decrease in revenue at our community newspapers and shoppers, excluding revenue from acquisitions, was primarily due to decreases in automotive, small-retailers and real estate advertising, partially offset by $0.6 million in revenue from publications acquired in Northern Wisconsin and Florida in late 2008.

Classified advertising has historically been the most sensitive to economic cycles because it is driven by the demand of employment, real estate transactions and automotive sales. As a result of the difficult economic environment and the ongoing secular trend of classified advertising transitioning to the internet, our publishing businesses experienced a significant decrease in classified advertising revenue in the third quarter of 2009 compared to the third quarter of 2008. Classified advertising revenue in the third quarter of 2009 was $7.1 million, a decrease of $5.5 million, or 44.0%, compared to $12.6 million in the third quarter of 2008. At our daily newspaper, print and online classified advertising revenue decreased by 48.7% from the third quarter of 2008, which is a smaller decrease against the comparable prior period than experienced in the first and second quarters of 2009. Specifically, the employment category decreased $2.8 million, or 65.0%; automotive decreased $1.3 million, or 53.9%; real estate decreased $1.0 million, or 41.0% and other decreased $0.3 million, or 15.5%. The average rate per inch of classified advertising has decreased primarily due to the significant decrease in employment classified revenue which, historically, has been at a higher rate than other categories. The same trends persisted in our community newspapers and shoppers business. At our community newspapers and shoppers business, a decrease in automotive, employment and real estate classified advertising revenue was partially offset by an increase in classified advertising revenue from newly acquired publications in Northern Wisconsin and Florida in late 2008 and an increase in legal classified advertising in Florida due to an increase in foreclosure notices.

The total decrease in retail and classified automotive advertising at our daily newspaper in the third quarter of 2009 was $1.8 million, or 53.2%, compared to the third quarter of 2008. The decrease was due to a decline in demand for advertising from local dealers and regional dealer associations. Consumers have decreased their purchases of new automobiles and, in response, local dealers and regional dealer associations are reducing their costs, including advertising costs.

Interactive advertising revenue is reported in the various advertising revenue categories. Total retail and classified interactive advertising revenue at our publishing businesses was $2.5 million in the third quarter of 2009, a decrease of $1.4 million, or 35.7%, compared to $3.9 million in the third quarter of 2008. Interactive classified advertising revenue at the daily newspaper was $1.1 million in the third quarter of 2009, a decrease of $1.3 million, or 55.3%, . . .