UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended December 31, 2004
OR


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

For the transition period from to

Commission File Number 033-75156

MEDIANEWS GROUP, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		76-0425553 (I.R.S. Employer Identification Number)

1560 Broadway, Suite 2100 Denver, Colorado (Address of principal executive offices)		80202 (Zip Code)

Registrant’s telephone number, including area code: (303) 563-6360

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Item (1) Yes X No Item (2) Yes No X*

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

The total number of shares of the registrant’s Class A Common Stock outstanding as of February 11, 2005 was 2,298,346.

*The registrant’s duty to file reports with the Securities and Exchange Commission has been suspended in respect of its fiscal year commencing July 1, 2004 pursuant to Section 15(d) of the Securities Exchange Act of 1934. It is filing this Quarterly Report on Form 10-Q on a voluntary basis.

INDEX TO MEDIANEWS GROUP, INC.
REPORT ON FORM 10-Q FOR THE QUARTER ENDED
DECEMBER 31, 2004


Item No.		Page
	PART I – FINANCIAL INFORMATION
1	Financial Statements	3
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
3	Quantitative and Qualitative Disclosure of Market Risk	3
4	Controls and Procedures	3
	PART II – OTHER INFORMATION
1	Legal Proceedings	4
2	Unregistered Sales of Equity Securities and Use of Proceeds	N/A
3	Defaults Upon Senior Securities	N/A
4	Submission of Matters to a Vote of Security Holders	4
5	Other Information	N/A
6	Exhibits	4
Signatures
Stock Purchase Agreement
Certification Pursuant to Section 302
Certification Pursuant Section 302
Certification Pursuant to Section 302
Certification Pursuant to Section 906
Certification Pursuant to Section 906

PART I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

The information required by this item is filed as part of this report on Form 10-Q. See Index to Financial Information on page 6 of this report on Form 10-Q.

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

The information required by this item is filed as part of this report on Form 10-Q. See Index to Financial Information on page 6 of this report on Form 10-Q.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

The information required by this item is filed as part of this report on Form 10-Q. See Index to Financial Information on page 6 of this report on Form 10-Q.

ITEM 4: CONTROLS AND PROCEDURES

As of December 31, 2004, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, President, and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer, President, and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that material information regarding us and our subsidiaries required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. During the period covered by this quarterly report, there have been no changes in our internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company’s management, including the CEO, President, and CFO, does not expect that our disclosure controls or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons or by collusion of two or more people. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II – OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

The information required by this item is filed as part of this report on Form 10-Q as Note 4 of the Notes to Condensed Consolidated Financial Statements. See Index to Financial Information on page 6 of this report on Form 10-Q.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

As of October 13, 2004, the holders of 93.1% of all outstanding shares of our Class A Common Stock acted by written consent in lieu of an annual meeting to re-elect Richard B. Scudder, William Dean Singleton, Jean L. Scudder and Howell E. Begle to our board of directors. Following the effectiveness of that action, our board of directors consisted of Richard B. Scudder, William Dean Singleton, Jean L. Scudder and Howell E. Begle.

ITEM 6: EXHIBITS

See Exhibit Index for list of exhibits filed with this report.

FORWARD-LOOKING STATEMENTS

This report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements contained herein and elsewhere in this report are based on current expectations. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms “expect,” “anticipate,” “intend,” “believe,” and “project” and similar words or expressions are intended to identify forward-looking statements. These statements speak only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results and events to differ materially from those anticipated and should be viewed with caution. Potential risks and uncertainties that could adversely affect our ability to obtain these results, and in most instances are beyond our control, include, without limitation, the following factors: (a) increased consolidation among major retailers, bankruptcy or other events that may adversely affect business operations of major customers and depress the level of local and national advertising, (b) an economic downturn in some or all of our principal newspaper markets that may lead to decreased circulation or decreased local or national advertising, (c) a decline in general newspaper readership patterns as a result of competitive alternative media or other factors, (d) increases in newsprint costs over the level anticipated, (e) labor disputes which may cause revenue declines or increased labor costs, (f) acquisitions of new businesses or dispositions of existing businesses, (g) costs or difficulties related to the integration of businesses acquired by us may be greater than expected, (h) increases in interest or financing costs, (i) rapid technological changes and frequent new product introductions prevalent in electronic publishing, including the ongoing evolution of the Internet and (j) other unanticipated events and conditions. It is not possible to foresee or identify all such factors. We make no commitment to update any forward-looking statement or to disclose any facts, events, or circumstances after the date hereof that may affect the accuracy of any forward-looking statements.

SIGNATURES

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


	MEDIANEWS GROUP, INC.
Dated: February 11, 2005	By:	/s/Ronald A. Mayo
		Ronald A. Mayo
		Vice President, Chief Financial Officer and Duly Authorized Officer of Registrant

MEDIANEWS GROUP, INC.
Index to Financial Information


		Page
Item 1:	Financial Statements
	Condensed Consolidated Balance Sheets		7
	Condensed Consolidated Statements of Operations		9
	Condensed Consolidated Statements of Cash Flows		10
	Notes to Condensed Consolidated Financial Statements		11
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3:	Quantitative and Qualitative Disclosure of Market Risk		29

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)
ASSETS	December 31, 2004			June 30, 2004
	(Dollars in thousands)
CURRENT ASSETS
Cash and cash equivalents	$	1,432		$	64,736
Accounts receivable, less allowance for doubtful accounts of $9,016 at December 31, 2004 and $9,131 at June 30, 2004		94,335			81,925
Inventories of newsprint and supplies		18,161			16,526
Prepaid expenses and other assets		10,238			8,280

TOTAL CURRENT ASSETS		124,166			171,467

PROPERTY, PLANT AND EQUIPMENT
Land		37,178			37,226
Buildings and improvements		104,894			104,993
Machinery and equipment		349,076			342,661
Construction in progress		20,895			7,110

TOTAL PROPERTY, PLANT AND EQUIPMENT		512,043			491,990
Less accumulated depreciation and amortization		(197,076	)		(184,614	)

NET PROPERTY, PLANT AND EQUIPMENT		314,967			307,376

OTHER ASSETS
Investment in unconsolidated JOAs		164,968			179,846
Equity investments		92,407			92,681
Subscriber accounts, less accumulated amortization of $141,926 at December 31, 2004 and $134,487 at June 30, 2004		56,541			63,980
Excess of cost over fair value of net assets acquired		421,521			418,600
Newspaper mastheads		139,266			139,266
Covenants not to compete and other identifiable intangible assets, less accumulated amortization of $31,229 at December 31, 2004 and $30,745 at June 30, 2004		4,527			5,011
Other		19,529			19,398

TOTAL OTHER ASSETS		898,759			918,782

TOTAL ASSETS	$	1,337,892		$	1,397,625

See notes to condensed consolidated financial statements

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY	December 31, 2004			June 30, 2004
	(Dollars in thousands, except share data)
CURRENT LIABILITIES
Trade accounts payable	$	6,665		$	7,180
Accrued liabilities		58,269			68,230
Unearned income		26,615			26,281
Current portion of long-term debt and obligations under capital leases		4,129			5,278

TOTAL CURRENT LIABILITIES		95,678			106,969

LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL LEASES		848,363			923,189

OTHER LIABILITIES		22,235			26,450

DEFERRED INCOME TAXES, NET		97,143			88,913

MINORITY INTEREST		168,652			165,084

SHAREHOLDERS’ EQUITY
Common stock, par value $0.001; 3,000,000 shares authorized:
2,314,346 shares issued and 2,298,346 shares outstanding		2			2
Additional paid-in capital		3,631			3,631
Accumulated other comprehensive loss, net of taxes		(22,021	)		(19,976	)
Retained earnings		126,209			105,363
Common stock in treasury, at cost, 16,000 shares		(2,000	)		(2,000	)

TOTAL SHAREHOLDERS’ EQUITY		105,821			87,020

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,337,892		$	1,397,625

See notes to condensed consolidated financial statements

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2004			2003			2004			2003
	(Dollars in thousands, except share data)
REVENUES
Advertising	$	159,189		$	152,459		$	308,213		$	294,484
Circulation		32,629			33,322			65,643			66,793
Other		9,798			9,858			19,413			19,439

TOTAL REVENUES		201,616			195,639			393,269			380,716

INCOME FROM UNCONSOLIDATED JOAS		9,590			10,974			14,806			15,743

COST AND EXPENSES
Cost of sales		60,964			58,998			121,725			117,202
Selling, general and administrative		93,965			88,391			189,884			178,415
Depreciation and amortization		10,108			9,825			20,217			20,050
Interest expense		12,103			14,010			24,319			28,088
Other (income) expense, net		(36	)		10,094			5,399			14,228

TOTAL COSTS AND EXPENSES		177,104			181,318			361,544			357,983

EQUITY INVESTMENT INCOME, NET		3,113			3,205			5,237			5,377

MINORITY INTEREST		(9,878	)		(11,727	)		(16,478	)		(19,888	)


INCOME BEFORE INCOME TAXES		27,337			16,773			35,290			23,965

INCOME TAX EXPENSE		(11,097	)		(6,787	)		(14,444	)		(9,671	)


NET INCOME	$	16,240		$	9,986		$	20,846		$	14,294


NET INCOME PER COMMON SHARE:
Net income per common share	$	7.07		$	4.34		$	9.07		$	6.22

Weighted average number of shares outstanding		2,298,346			2,298,346			2,298,346			2,298,346

See notes to condensed consolidated financial statements

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)


	Six Months Ended December 31,
	2004			2003
	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	20,846		$	14,294
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		22,309			22,252
Provision for losses on accounts receivable		4,368			4,154
Amortization of debt discount		541			336
Net (gain) loss on sale of assets		(109	)		224
Loss on early extinguishment of debt		9,236			9,200
Proportionate share of net income from unconsolidated JOAs		(39,175	)		(38,938	)
Distributions from unconsolidated JOAs		47,590			37,791
Equity investment income, net		(5,237	)		(5,377	)
Change in defined benefit plan assets, net of cash contributions		498			549
Deferred income tax expense		9,950			8,024
Change in estimated option repurchase price		(5,556	)		1,065
Minority interest		16,478			19,888
Distributions paid to minority interest		(12,342	)		(17,129	)
Unrealized loss on hedging activities, reclassified to earnings from accumulated other comprehensive loss		228			1,213
Unrealized loss on swaps		—			1,307
Change in operating assets and liabilities		(29,029	)		(26,470	)

NET CASH FLOWS FROM OPERATING ACTIVITIES		40,596			32,383

CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from equity investments		5,511			5,614
Investments in equity investments		—			(50	)
Business acquisitions		(2,879	)		(2,519	)
Capital expenditures		(21,430	)		(24,541	)
Proceeds from the sale of assets		322			1,559

NET CASH FLOWS FROM INVESTING ACTIVITIES		(18,476	)		(19,937	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt		406,650			375,998
Reduction of long-term debt and other liabilities		(483,450	)		(379,762	)
Repurchase premiums and related costs associated with long-term debt		(8,624	)		(9,370	)

NET CASH FLOWS FROM FINANCING ACTIVITIES		(85,424	)		(13,134	)

DECREASE IN CASH AND CASH EQUIVALENTS		(63,304	)		(688	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		64,736			3,343

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,432		$	2,655

See notes to condensed consolidated financial statements

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1: Significant Accounting Policies and Other Matters

Basis of Quarterly Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in MediaNews Group, Inc.’s (“MediaNews” or the “Company”) Annual Report on Form 10-K for the year ended June 30, 2004. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended December 31, 2004 are not necessarily indicative of the results that may be expected for future interim periods or for the year ended June 30, 2005.

Joint Operating Agencies

A joint operating agency (“JOA”) performs the production, sales, distribution and administrative functions for two or more newspapers in the same market under the terms of a joint operating agreement. Editorial control and news at each of the individual newspapers that are party to a joint operating agreement continue to be separate and outside of the related JOA. The Company, through its subsidiaries, York Newspapers, Inc., Kearns-Tribune, LLC, and The Denver Post Corporation, participates in JOAs in York, Pennsylvania, Salt Lake City, Utah, and Denver, Colorado, respectively. The editorial and related expenses of The Denver Post, The Salt Lake Tribune and York Dispatch are incurred by the Company outside the related JOA. The Company controls the York JOA prior and subsequent to its fiscal year 2004 restructuring and accordingly consolidates its results. However, the editorial costs associated with the York Daily Record, the other newspaper in the York JOA, were not included in the Company’s results prior to May 1, 2004 because, until then, the newspaper was not owned by MediaNews. The Company also owned a 50% interest in a JOA in Charleston, West Virginia through May 7, 2004. See Note 3: Joint Operating Agencies of the Company’s June 30, 2004 Annual Report on Form 10-K and Note 4: Contingent Matters of this Form 10-Q regarding the York and Charleston JOA restructurings.

The Company’s unconsolidated JOAs (Denver, Salt Lake City and, through May 7, 2004, Charleston) are reported as a single net amount in the accompanying financial statements in the line item “Income from Unconsolidated JOAs.” This line item includes:

	•		The Company’s proportionate share of net income from JOAs,

	•		The amortization of subscriber lists created by the original purchase by the Company of the JOAs’ interests as the subscriber lists are attributable to the Company’s earnings in the JOAs, and

	•		Editorial costs, miscellaneous revenue received outside of the JOA, and other charges incurred by the Company’s subsidiaries directly attributable to the JOAs in providing editorial content and news for the Company’s newspapers party to a JOA.

Investments in unconsolidated JOAs are reported in the consolidated balance sheet under the line item “Investment in Unconsolidated JOAs” for the JOAs the Company does not control (see Note 3: Joint Operating Agencies for further discussion).

Reclassifications

For comparability, certain prior year balances have been reclassified to conform to current reporting classifications.

Guarantees

Through its wholly-owned subsidiary, Kearns-Tribune, LLC, the Company owns a 6.0% interest in Ponderay Newsprint Company (“Ponderay”) and is also a guarantor, on a several basis, on 6.0% of up to $125.0 million of Ponderay’s credit facility, which is due April 12, 2006. In accordance with Financial Accounting Standard Board (“FASB”) Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Others (“FIN No. 45”), the Company has no amounts related to the guarantee recorded in its financial statements because the guarantee existed prior to and has not been modified since December 31, 2002. The guarantee arose from Ponderay’s April 12, 2000 amended and restated credit agreement that replaced a previous credit facility which had been used to finance the construction of its newsprint mill. The guarantee could be triggered by Ponderay’s failure to meet any of its bank covenants, at which time the Company could be liable for its portion of the guarantee. At December 31, 2004, the Company’s share of the guarantee is approximately $4.3 million. The debt is collateralized by a deed of trust on Ponderay’s real property and a mortgage on all of Ponderay’s other assets.

Income Taxes

At the end of each interim period the Company makes its best estimate regarding the effective tax rate expected to be applicable for the full fiscal year. The rate so determined is used in providing for income taxes on a current year to date basis. Accordingly, the effective tax rates for the three-month and corresponding year to date periods presented in an interim report on Form 10-Q may vary significantly. The effective income tax rate varies from the federal statutory rate because of state income taxes and the non-deductibility of certain expenses.

Seasonality

Newspaper companies tend to follow a distinct and recurring seasonal pattern, with higher advertising revenues in months containing significant events or holidays. Accordingly, the fourth calendar quarter, or the Company’s second fiscal quarter, is the Company’s strongest revenue quarter of the year. Due to generally poor weather and lack of holidays, the first calendar quarter, or the Company’s third fiscal quarter, is the Company’s weakest revenue quarter of the year.

NOTE 2: Comprehensive Income

The Company’s comprehensive income consisted of the following:


	Three Months Ended December 31,						Six Months Ended December 31,
	2004			2003			2004			2003
	(Dollars in thousands)
Net income	$	16,240		$	9,986		$	20,846		$	14,294
Unrealized gain on hedging activities, net of tax		—			—			—			291
Unrealized loss on newsprint and interest rate hedging activities, reclassified to earnings, net of tax		114			648			228			1,213
Minimum pension liability adjustment, net of tax		(2,273	)		(379	)		(2,273	)		(379	)

Comprehensive income	$	14,081		$	10,255		$	18,801		$	15,419

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 3: Joint Operating Agencies

The following tables present the summarized results of the Company’s unconsolidated JOAs on a combined basis. The Salt Lake City JOA data has been presented separately because, as of June 30, 2004, it is a significant investee of the Company determined in accordance with Rule 3-09 of Regulation S-X. Beginning in fiscal year 2005, the Denver JOA data also is presented separately as a result of the Charleston JOA restructuring in May 2004 (see Note 1: Significant Accounting Policies and Other Matters). The fiscal year 2004 data combines the Denver JOA and Charleston JOA data in the column “Other Unconsolidated JOAs.” The Salt Lake City JOA, Denver JOA and Other Unconsolidated JOA information is presented at 100%, with the other partners’ share of income from the related JOAs subsequently eliminated. The editorial costs, miscellaneous revenue received outside of the JOA, depreciation, amortization, and other direct costs incurred outside of the JOAs by our consolidated subsidiaries associated with The Salt Lake Tribune, The Denver Post, and, through May 7, 2004, the Charleston Daily Mail, are included in the column “Associated Revenues and Expenses.” The 20% minority interest associated with The Denver Post Corporation has not been reflected in the tables below.


	Three Months Ended December 31, 2004
										Total Income
							Associated			from
	Salt Lake						Revenues and			Unconsolidated
	City JOA			Denver JOA			Expenses			JOAs
	(Dollars in thousands)
*Income Statement Data:*
Total revenues	$	38,096		$	113,383		$	122

Cost of sales		7,748			34,838			8,967
Selling, general and administrative		13,755			49,119			2,534
Depreciation and amortization		—			4,584			1,043
Other		127			70			(8	)

Total costs and expenses		21,630			88,611			12,536

Net income		16,466			24,772			(12,414	)
Partners’ share of income from unconsolidated JOAs		(6,848	)		(12,386	)		—

Income from unconsolidated JOAs	$	9,618		$	12,386		$	(12,414	)	$	9,590


	Six Months Ended December 31, 2004
										Total Income
							Associated			from
	Salt Lake						Revenues and			Unconsolidated
	City JOA			Denver JOA			Expenses			JOAs
	(Dollars in thousands)
*Income Statement Data:*
Total revenues	$	73,972		$	219,929		$	247

Cost of sales		15,982			69,332			17,408
Selling, general and administrative		26,347			99,207			5,059
Depreciation and amortization		—			9,328			2,092
Other		166			416			57

Total costs and expenses		42,495			178,283			24,616

Net income		31,477			41,646			(24,369	)
Partners’ share of income from unconsolidated JOAs		(13,125	)		(20,823	)		—

Income from unconsolidated JOAs	$	18,352		$	20,823		$	(24,369	)	$	14,806

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


	Three Months Ended December 31, 2003
											Total Income
				Other			Associated				from
	Salt Lake			Unconsolidated			Revenues and			Unconsolidated
	City JOA			JOAs			Expenses				JOAs
	(Dollars in thousands)
*Income Statement Data:*
Total revenues	$	36,323		$	123,033		$	122

Cost of sales		8,360			37,921			8,265
Selling, general and administrative		12,770			51,061			2,273
Depreciation and amortization		—			5,548			1,107
Other		—			713			259

Total costs and expenses		21,130			95,243			11,904

Net income		15,193			27,790			(11,782	)
Partners’ share of income from unconsolidated JOAs		(6,332	)		(13,895	)		—

Income from unconsolidated JOAs	$	8,861		$	13,895		$	(11,782	)		$	10,974


	Six Months Ended December 31, 2003
										Total Income
				Other		Associated				from
	Salt Lake			Unconsolidated		Revenues and			Unconsolidated
	City JOA			JOAs		Expenses				JOAs
	(Dollars in thousands)
*Income Statement Data:*
Total revenues	$	69,536		$	236,255	$	254

Cost of sales		15,805			75,720		16,293
Selling, general and administrative		25,082			104,117		4,514
Depreciation and amortization		—			10,955		2,202
Other		2			997		440

Total costs and expenses		40,889			191,789		23,449

Net income		28,647			44,466		(23,195	)
Partners’ share of income from unconsolidated JOAs		(11,942	)		(22,233)		—

Income from unconsolidated JOAs	$	16,705		$	22,233	$	(23,195	)		$	15,743

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 4: Contingent Matters

MediaNews and Salt Lake Tribune Publishing Company (“SLTPC”) continue to be involved in litigation over SLTPC’s option to acquire the assets used in connection with the operation and publication of The Salt Lake Tribune (the “Option Agreement”). For additional discussion on the litigation, please refer to Note 11: Commitments and Contingencies of the Company’s Annual Report on Form 10-K for the year ended June 30, 2004.

One issue in dispute is the exercise price should SLTPC acquire the Tribune Assets (defined as all of the assets used, held for use or usable in connection with the operation and publication of The Salt Lake Tribune). The terms of the Option Agreement specify an appraisal process for determination of the fair market value of the Tribune Assets. In this appraisal process, each party engaged an appraisal firm to value the Tribune Assets at their fair market value. The Company’s appraisal valued the Tribune Assets at $380.0 million, whereas SLTPC’s appraisal valued the Tribune Assets at $218.0 million. Because the Company’s and SLTPC’s appraisals were more than 10% apart, the appraisers appointed by the Company and SLTPC were required to jointly select a third appraiser. Under the terms of the Option Agreement, the final option purchase price is based on the average of the third appraisal valuation with the closer of the first two appraisals. On June 11, 2003, the third appraiser issued its final report valuing the Tribune Assets at $331.0 million. Because the third appraiser’s valuation is closer to the Company’s appraisal, under the Option Agreement those two appraisals would be averaged together for an option exercise price of $355.5 million for the Tribune Assets. After the third appraiser’s final report was issued, SLTPC filed a lawsuit in the District Court on June 24, 2003 (the “appraisal lawsuit”), challenging the valuation performed by the third appraiser and seeking to set aside the third appraisal and the $355.5 exercise price. The District Court ruled that the appraisal process constituted an arbitration under the Federal Arbitration Act (“FAA”) and that any challenge must therefore be made under the procedures set forth in the FAA. The District Court subsequently denied SLTPC’s motion under the FAA procedures seeking to set aside the appraisal, and, as a consequence of its arbitration rulings, also dismissed the appraisal lawsuit. SLTPC appealed those rulings to the Tenth Circuit, and on November 30, 2004, the Tenth Circuit reversed the District Court’s rulings. While taking no position on the merits of the dispute as to the finality of the third appraisal and the validity of the $355.5 million exercise price, the Tenth Circuit held that the Option Agreement’s appraisal procedure did not constitute arbitration within the meaning of the FAA. The Tenth Circuit accordingly reinstated SLTPC’s appraisal lawsuit, which the District Court had dismissed under the reasoning that the appraisal constituted arbitration. In the reinstated appraisal lawsuit, SLTPC seeks relief that includes (a) the setting aside of the third appraisal; (b) the setting aside of all three appraisals, so that an entirely new appraisal process must be conducted; or (c) alternatively, if the exercise price of $355.5 million is held to be final and binding, monetary damages from the third appraiser for alleged breaches of contractual and fiduciary duties. SLTPC does not seek damages in the appraisal lawsuit from the Company. No schedule of proceedings has been set at this time in the appraisal lawsuit.

During the time in which the appraisal and exercise price issues were on appeal before the Tenth Circuit, SLTPC’s main action was stayed (and the November 3, 2003 trial date was vacated). The District Court has not yet indicated whether that stay will remain in place until SLTPC’s appraisal lawsuit has been resolved, or whether the main action and the appraisal lawsuit will proceed simultaneously. In the main action, SLTPC’s pending claims against the Company and Kearns Tribune include claims for damages for breach of contract and breach of contractual duties (in the event some or all of the Tribune Assets are not transferred to SLTPC) and for interference with contract (arising out of the amendment of the JOA in 2001). The Company and Kearns Tribune have pending counterclaims against SLTPC, which include claims for damages for breaches of contract and interference with contract. Additionally, the Company and Kearns Tribune have pending counter claims for declaratory judgment, but no damage claims against Deseret Publishing. Deseret Publishing has pending claims against SLTPC for damages, and claims that do not seek damages against the Company and Kearns Tribune as to the meaning and enforceability of the Option Agreement and related Management and Joint Operating Agreements. Additionally, depending on the outcome of the appraisal lawsuit, the main action may include claims by the parties concerning whether the Option expired when SLTPC did not exercise it on October 10, 2003 (as the Company has contended), or whether SLTPC still has the opportunity to exercise the Option regardless of whether or not the $355.5 million exercise price is found to be binding and conclusive (as SLTPC contends). No schedule for proceedings in the main action has been set at this time.

Also pending before the District Court is the Company’s declaratory judgment action, which seeks a ruling that the defendants, including certain individuals who control SLTPC, do not have any rights as individuals (separate from their corporate entity, SLTPC) to purchase or otherwise acquire the Tribune Assets. The District Court denied without prejudice motions to dismiss and for partial summary judgment filed by the defendants. In this same pending declaratory judgment action, the defendants filed a motion asking the District Judge to make disclosures relating to his possible recusal. This

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

motion followed similar motions in the underlying litigation, in which the District Judge made certain disclosures and declined to recuse himself. The defendants sought review of the District Court’s order from the Tenth Circuit through a petition for a writ of mandamus, which the Tenth Circuit court denied. The defendants subsequently filed a motion for recusal of the District Judge from the declaratory judgment action. That motion, which was assigned for decision to another United States District Court Judge, was denied on January 27, 2005. No schedule for proceedings in this declaratory judgment action has been set at this time.

The Company is not in a position at this time to predict the likely outcome of this litigation. However, the Company does not believe that the litigation will have a materially adverse impact on its financial condition, results of operations, or liquidity. Approximately $0.2 million and $0.4 million, respectively, was recorded in other (income) expense, net for the three and six months ended December 31, 2004, related to the cost of defending these lawsuits. The cost of defending these lawsuits may continue to be substantial.

Other

In May 2004, the Company restructured its interest in Charleston Newspapers (“Charleston JOA”). In exchange for $55.0 million (less a net adjustment for 50% of Charleston Newspapers’ net working capital, long-term employee benefits liabilities and long-term debt) and a limited partnership interest in a newly formed entity (Charleston Newspapers Holdings, L.P.), the Company contributed its general partnership interest in Charleston Newspapers and the masthead of the Charleston Daily Mail to Charleston Newspapers Holdings L.P. The Company’s former partner in Charleston Newspapers is the general partner in Charleston Newspapers Holdings L.P. In addition, in conjunction with the restructuring, the Company also agreed to continue to be responsible for the news and editorial content of the Charleston Daily Mail. Under the Company’s agreement with Charleston Newspapers Holdings L.P., the Company is reimbursed for the cost of providing the news and editorial content of the Charleston Daily Mail and paid a management fee. The Company’s limited partnership interest does not entitle it to any share of the profits or losses of the limited partnership.

Also in May 2004, the Company restructured its interest in The York Newspaper Company (“York JOA”) through the exercise of its call option to acquire the remaining 42.5% interest in The York Newspaper Company and the masthead of the York Daily Record for approximately $38.3 million. After the option exercise and the restructuring of the York JOA, the Company became responsible for the news and editorial content of the York Daily Record and an affiliate of its former partner in The York Newspaper Company became responsible for providing the news and editorial content for The York Dispatch. Under the restructured York JOA, the Company reimburses the affiliate of its former partner for the cost of providing the news and editorial content of The York Dispatch, plus a management fee of $240,000 per year, indexed for inflation.

The Company and the other participants in such restructurings have received civil investigative demands from the Department of Justice seeking information concerning the recent restructurings of the Charleston and York JOAs. In discussions with the Department of Justice, the Company has proposed potential amendments to the agreements governing the York JOA to clarify the rights and obligations of the parties under certain circumstances. The Company anticipates that any such amendments would not be material. The Company believes that the general partner in Charleston Newspapers Holdings L.P. will propose similar amendments to the Charleston JOA.

There have been no other material changes in the other contingent matters discussed in Note 11: Commitments and Contingencies of the Company’s Annual Report on Form 10-K for the year ended June 30, 2004.

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 5: Contingent Consideration — Purchase of Original Apartment Magazine

In conjunction with the Company’s October 1, 2002 purchase of the Original Apartment Magazine, the seller was eligible to receive an earnout of up to $6.0 million over two years dependent on future operating performance. On September 30, 2003, year one of the earnout, the seller earned and was paid $2.3 million of the earnout which was recorded as an adjustment to goodwill at September 30, 2003. Effective September 30, 2004, or year two of the agreement, the seller earned an additional $2.6 million of the earnout, which was paid in November 2004. This payment was recorded as an adjustment to goodwill at September 30, 2004 and reflects the final payment to be made under the earnout agreement. The seller continues to have a separate consulting agreement with the Company through September 2005.

NOTE 6: Long-Term Debt

Long-term debt (excluding capital leases) consisted of the following:


				December 31,			June 30,
				2004
				(Dollars in thousands)
Bank Credit Facility (Revolving Portion)		(I	)	$	126,000		$	—
Bank Term Loan A		(I	)		100,000			—
Bank Term Loan C		(I	)		148,006			—
Bank Term Loan B		(I	)		—			248,750
Various Notes, payable through 2013	(II)				25,920			27,303
8.625% Senior Subordinated Notes, due 2011	(III)				—			199,388
6.875% Senior Subordinated Notes, due 2013	(IV)				297,611			297,513
6.375% Senior Subordinated Notes, due 2014		(V	)		148,729			148,680

					846,266			921,634
Less current portion of long-term debt					(3,960	)		(5,083	)

				$	842,306		$	916,551

On August 30, 2004, the Company entered into an amendment and restatement of its December 30, 2003 bank credit facility (the “amended facility”). The amended facility maintains the $350.0 million revolving credit facility and provides for a $100.0 million term loan “A” and a $148.8 million term loan “C,” both of which were used to refinance the term loan “B” facility. The term loan “A” bears interest at rates based upon, at the Company’s option, Eurodollar or base rates (derived from prime), plus a borrowing margin based on the Company’s leverage ratio. The Eurodollar and base rate borrowing margins on term loan “A” are set at 1.50% and 0.50%, respectively, through August 30, 2005, after which borrowings will bear interest at the Eurodollar or base rate, at the Company’s option, plus a borrowing margin based on the pricing grid used for the revolving credit facility. Term loan “A” requires quarterly principal payments as follows: $5.0 million beginning in March 2008 through December 2008; $7.5 million from March 2009 through December 2009; and $12.5 million from March 2010 through September 2010, with the remaining balance due at maturity on December 30, 2010. The term loan “C” bears interest based upon, at the Company’s option, Eurodollar or base rates, plus a borrowing margin of 1.5% or 0.5%, respectively. Term loan “C” requires quarterly principal payments as follows: $0.4 million beginning in September 2004 through December 2009, increasing to $35.1 million from March through September 2010, with the remaining balance due at maturity on December 30, 2010. Amounts repaid under the term loan “A” and “C” facilities will not be available for re-borrowing. The Company incurred debt issuance costs of $0.3 million related to the amended facility. All other borrowing conditions of the bank credit facility entered into on December 30, 2003, as described in Note 6: Long-Term Debt of the Company’s June 30, 2004 Annual Report on Form 10-K, continue to apply and have not been amended.

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

II.		In connection with various acquisitions, the Company’s subsidiaries have issued notes payable to prior owners and assumed certain debt obligations.

III.		In March 1999, Garden State, the predecessor issuer of MediaNews Group, Inc., issued $200.0 million of 8.625% Senior Subordinated Notes due 2011, or “8.625% Notes.” On July 1, 2004, the Company repurchased all outstanding 8.625% Notes using cash on hand and borrowings under its bank credit facility. The Company paid $8.6 million in premiums and related costs associated with the redemption of the 8.625% Notes which was charged to “other (income) expense, net” during the three months ended September 30, 2004.

IV.		On November 25, 2003, the Company completed the sale of $300.0 million of its 6.875% Senior Subordinated Notes due 2013 (or “6.875% Notes”). See Note 6: Long-Term Debt of the Company’s June 30, 2004 Annual Report on Form 10-K for further description.

V.		On January 26, 2004, the Company completed the sale of $150.0 million of its 6.375% Senior Subordinated Notes due 2014 (or “6.375% Notes”). The Company used the proceeds of the sale of $146.9 million to temporarily prepay all borrowings under the new bank credit facility. Such prepayment was reborrowed and used, along with cash on hand, to repurchase all of its outstanding $200.0 million 8.625% Notes on July 1, 2004. See Note 6: Long-Term Debt of the Company’s June 30, 2004 Annual Report on Form 10-K for further description.

Maturities of long-term debt for the next five fiscal years ending June 30 and thereafter beginning with the fiscal year ended June 30, 2005 (except for June 30, 2005, which is only reflective of the six months remaining) are shown below (in thousands):


2005	$	1,884
2006		3,723
2007		3,715
2008		13,510
2009		28,363
Thereafter		795,071

	$	846,266

The table above does not include capital lease obligations of $6.2 million.

The fair market values of the 6.875% Notes and 6.375% Notes at December 31, 2004 were approximately $307.5 million and $148.5 million, respectively. The carrying value of the Company’s bank debt, which has interest rates tied to prime or the Eurodollar, approximates its fair value. Management cannot practicably estimate the fair value of the remaining long-term debt because of the lack of quoted market prices for these types of securities and its inability to estimate the fair value without incurring the excessive costs of obtaining an appraisal. The carrying amount represents the Company’s original issue price net of remaining original issue discounts, if applicable.

In January 1998, the Company entered into an option agreement in association with the acquisition financing related to one of its newspapers. The option entitles the holder to purchase the assets used in the publication of one of the Company’s newspaper properties, which the option holder can currently exercise or put to the Company based on a predetermined formula. At December 31, 2004, the option repurchase price is valued at approximately $5.9 million and is recorded as a component of other long-term liabilities (at September 30, 2004 and June 30, 2004, the option repurchase price was valued at approximately $6.4 million and $11.4 million, respectively). The $0.5 million and $5.5 million reduction in the liability was credited to other (income) expense, net during the three and six month periods ended December 31, 2004, respectively. The purchase price of the option can increase or decrease significantly each quarter based on the performance of the publication because a significant component of the option repurchase formula is the twenty-four month trailing cash flows of the publication. If the option is put to the Company, the Company expects to fund the payment with available borrowings from its bank credit facility. As a result, in accordance with SFAS No. 6, Classification of Short-Term Obligations Expected to be

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Refinanced, the option repurchase price remains classified in the Company’s balance sheet as long-term. The option expires in January 2010 at which time if the option remains outstanding, the Company would be required to repurchase the option.

NOTE 7: Employee Benefit Plans

Components of Net Periodic Benefit Cost (Pension and Other Benefits):


	Pension Plans
	Three Months Ended December 31,						Six Months Ended December 31,
	2004			2003			2004			2003
	(Dollars in thousands)
Service cost	$	279		$	286		$	558		$	572
Interest cost		1,487			1,422			2,974			2,844
Expected return on plan assets		(1,591	)		(1,760	)		(3,182	)		(3,520	)
Amortization of deferral		115			115			230			230
Amortization of net loss		510			402			1,020			804
Curtailment loss		443			—			443			—

Net periodic benefit cost	$	1,243		$	465		$	2,043		$	930


	Other Benefits
	Three Months Ended December 31,					Six Months Ended December 31,
	2004		2003			2004		2003
	(Dollars in thousands)
Service cost	$	87	$	83		$	174	$	166
Interest cost		81		82			162		164
Expected return on plan assets		—		—			—		—
Amortization of deferral		—		(1	)		—		(2	)
Amortization of net loss		16		23			32		46
Curtailment loss		28		—			28		—

Net periodic benefit cost	$	212	$	187		$	396	$	374

Employer Contributions

The Company expects to contribute between $2.0 million and $3.0 million to its pension plans in fiscal year 2005. As of December 31, 2004, contributions of approximately $1.3 million have been made.

Effective January 1, 2005, the Company will no longer provide post-retirement health care coverage for the majority of Kearns-Tribune, LLC employees retiring after that date. In conjunction with the partial freeze of this plan, the Company recognized a small curtailment loss for the three and six months ended December 31, 2004.

Effective April 1, 2005, the Company will freeze the defined benefit pension plan benefits associated with the employees of one of the Company’s subsidiaries. In conjunction with the freeze of the accrual of benefits for these employees, the Company recognized a curtailment loss of approximately $0.4 million for the three and six months ended December 31, 2004.

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 8: Other Transactions

Effective September 30, 2004, the Company elected not to extend the Joint Sales Agreement (or “JSA”) and purchase agreement between the Piedmont Television Holding LLC (or “Piedmont”) station, KTBY, and the Company’s Anchorage, Alaska affiliate, KTVA, and as a result, the agreements were terminated. The termination of the JSA is not expected to have any material impact on the operations or valuation of the Company’s television station, KTVA. For further discussion, see Note 5: Acquisitions, Dispositions and Other Transactions of the Company’s June 30, 2004 Annual Report on Form 10-K.

NOTE 9: Equity Investments (Non-JOA)

The following table represents the summary financial data, on a combined basis, for the Company’s non-JOA equity investments (the entities represented in the table below are included at 100%). For a listing of the Company’s equity investments, see Note 2: Significant Accounting Policies and Other Matters – Investments of the Company’s June 30, 2004 Annual Report on Form 10-K.


	Three Months Ended December 31,				Six Months Ended December 31,
	2004		2003		2004		2003
			(Dollars in thousands)
Total revenues	$	70,512	$	67,235	$	121,441	$	119,220
Net income	$	10,551	$	8,694	$	17,763	$	16,550

NOTE 10: Commitments

In December 2004, the Company entered into a contract with a newsprint vendor to purchase newsprint based on market price beginning January 1, 2005 (24,000 metric tons for calendar year 2005) and continuing through December 31, 2009 (36,000 metric tons per year for calendar years 2006-2009).

NOTE 11: Subsequent Events

Purchase of The Park Record

On January 4, 2005, the Company entered into a Stock Purchase Agreement, pursuant to which the Company purchased all of the outstanding common stock of Diversified Suburban Newspapers, Inc. (“Diversified”). Diversified was 50% owned by The Singleton Family Revocable Trust at the time of purchase. Diversified is the publisher of The Park Record, in Park City, Utah. The purchase price was approximately $8.0 million, subject to adjustment to reflect final working capital balances. The Company received a fairness opinion on the purchase price. The transaction was unanimously approved by the disinterested directors of the Company.

The Singleton Family Revocable Trust holds 254,858.99 shares of the Company’s Class A Common Stock, representing 11.09% of total shares of Class A Common Stock outstanding. W. Dean Singleton, Vice Chairman, Chief Executive Officer and a director of the Company, and Howell Begle, Assistant Secretary, General Counsel and a director of the Company, are trustees of The Singleton Family Revocable Trust. W. Dean Singleton is a beneficiary of The Singleton Family Revocable Trust.

Commitments

The Company owns 80% and Media General, Inc. (“Media General”) owns 20% of The Denver Post Corporation. The Denver Post Shareholders’ Agreement provides the Company with a call option on Media General’s 20% interest in The Denver Post Corporation. The call option became exercisable on July 1, 2004 and expires June 30, 2005. In January 2005, the Company delivered notice to Media General exercising its call option. No amount has been recorded in the Company’s December 31, 2004 financial statements related to the exercise of the call option. The exercise price will be based on the fair

MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

market value of The Denver Post Corporation, less debt of The Denver Post Corporation, determined through an appraisal process specified in The Denver Post Shareholders’ Agreement. The terms of the appraisal process require the Company and Media General to each engage a qualified independent appraisal firm. If the two independent appraisals of The Denver Post Corporation are within 20% of each other, the average of the two appraisals will be used to determine the exercise price. However, if the two appraisals are not within 20% of each other, the two qualified independent appraisers will select a third qualified independent appraiser to determine the fair market value. The average of the two closest of the three appraisals or the middle appraisal if it is equidistant from the high and low of the three appraisals will be used to determine the exercise price. The Denver Post Shareholders’ Agreement provides that the closing of such transaction is to take place within 15 business days of the completion of the appraisal process. The Company currently anticipates that the closing will occur in the fourth quarter of its fiscal year 2005.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Operating Results

We have provided below certain summary historical financial data for the three and six months ended December 31, 2004 and 2003, including the percentage change between periods.


	Three Months Ended December 31,									Six Months Ended December 31,
							2004 vs.									2004 vs.
	2004			2003			2003			2004			2003			2003
							(Dollars in thousands)
INCOME STATEMENT DATA:
Total Revenues	$	201,616		$	195,639			3.1	%	$	393,269		$	380,716			3.3	%

Income from Unconsolidated JOAs		9,590			10,974			(12.6	)		14,806			15,743			(6.0	)

Cost of Sales		60,964			58,998			3.3			121,725			117,202			3.9
Selling, General and Administrative		93,965			88,391			6.3			189,884			178,415			6.4
Depreciation and Amortization		10,108			9,825			2.9			20,217			20,050			0.8
Interest Expense		12,103			14,010			(13.6	)		24,319			28,088			(13.4	)
Other (Income) Expense, Net		(36	)		10,094			(100.4	)		5,399			14,228			(62.1	)

Total Costs and Expenses		177,104			181,318			(2.3	)		361,544			357,983			1.0

Equity Investment Income, Net		3,113			3,205			(2.9	)		5,237			5,377			(2.6	)

Minority Interest		(9,878	)		(11,727	)		(15.8	)		(16,478	)		(19,888	)		(17.1	)

Net Income		16,240			9,986			62.6			20,846			14,294			45.8

CASH FLOW DATA:
Cash Flows from:
Operating Activities	$	33,122		$	13,521					$	40,596		$	32,383
Investing Activities		(16,946	)		(18,584	)					(18,476	)		(19,937	)
Financing Activities		(16,949	)		1,004						(85,424	)		(13,134	)

NON-GAAP FINANCIAL DATA(a):
Adjusted EBITDA	$	46,687		$	48,250			(3.2	)%	$	81,660		$	85,099			(4.0	)%
Minority Interest in Adjusted EBITDA		(12,899	)		(15,351	)		(16.0	)		(22,164	)		(26,626	)		(16.8	)
Combined Adjusted EBITDA of Unconsolidated JOAs		13,023			15,471			(15.8	)		21,923			24,363			(10.0	)
EBITDA of Texas-New Mexico Newspapers Partnership(b)		2,743			2,977			(7.9	)		5,033			5,394			(6.7	)

Adjusted EBITDA Available to Company	$	49,554		$	51,347			(3.5	)%	$	86,452		$	88,230			(2.0	)%

(a)		Non-GAAP Financial Data. Adjusted EBITDA and Adjusted EBITDA Available to Company are not measures of performance recognized under GAAP. However, we believe that they are indicators and measurements of our leverage capacity and debt service ability. Adjusted EBITDA and Adjusted EBITDA Available to Company should not be considered as an alternative to measure profitability, liquidity, or performance, nor should they be considered an alternative to net income, cash flows generated by operating, investing or financing activities, or other financial statement data presented in our condensed consolidated financial statements. Adjusted EBITDA is calculated by deducting cost of sales and SG&A expense from total revenues. Adjusted EBITDA Available to Company is calculated by: (i) reducing Adjusted EBITDA by the minorities’ interest in the Adjusted EBITDA generated from the California Newspapers Partnership, The Denver Post Corporation, and through April 30, 2004, The York Newspaper Company, our less than 100% owned consolidated subsidiaries (“Minority Interest in Adjusted EBITDA”); (ii) increasing Adjusted EBITDA by our combined proportionate share of the Adjusted EBITDA generated by our unconsolidated JOAs in Denver, Salt Lake City and through May 7, 2004, Charleston (“Combined Adjusted EBITDA of Unconsolidated JOAs”); and (iii) increasing Adjusted EBITDA by our proportionate share of EBITDA of the Texas-New Mexico Newspapers Partnership (see footnote b). See “Reconciliation of GAAP and Non-GAAP Financial Information — Reconciliation of Cash Flows from Operating Activities (GAAP measure) to Adjusted EBITDA (Non-GAAP measure)” for a reconciliation of Non-GAAP financial information.

(b)		EBITDA of Texas-New Mexico Newspapers Partnership. The Texas-New Mexico Newspapers Partnership agreement requires the partnership to make distributions equal to the earnings of the partnership before depreciation and amortization (EBITDA). EBITDA of Texas-New Mexico Newspapers Partnership has been included in Adjusted EBITDA Available to Company, as it is an integral part of our cash flows from operations as defined by our debt covenants. Previously, we had included distributions from the Texas-New Mexico Newspapers Partnership in Adjusted EBITDA Available to Company. However, now we include our 33.8% share of the EBITDA of Texas-New Mexico Newspapers Partnership. This change was made in order to better conform to the definition of operating cash flows in our debt agreements. All periods presented reflect this change.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Summary Supplemental Non-GAAP Financial Data

Joint operating agencies, or JOAs, represent an operating structure that is unique to the newspaper industry. Prior to EITF 00-1, which eliminated the use of pro-rata consolidation except in the extractive and construction industries, we reported the results of our JOA interests on a pro-rata consolidated basis. Under this method, we consolidated, on a line-item basis, our proportionate share of the JOAs’ operations. Although pro-rata consolidation is no longer considered an acceptable method for our financial reporting under GAAP, we believe it provides a meaningful presentation of the results of our operations and the amount of operating cash flow available to meet debt service and capital expenditure requirements. Our JOA agreements do not restrict cash distributions to the owners and in general our JOAs make monthly distributions. We use pro-rata consolidation to internally evaluate our performance and present it here because our bank credit agreement and the indentures governing our senior subordinated notes define cash flows from operations for covenant purposes using pro-rata consolidation. We also believe financial analysts and investors use pro-rata consolidation and the resulting Adjusted EBITDA, combined with capital spending requirements, and leverage analysis to evaluate our performance. This information should be used in conjunction with GAAP performance measures in order to evaluate our overall prospects and performance. Net income determined using pro-rata consolidation is identical to net income determined under GAAP.

In the table below, we have presented the results of operations of our JOAs using pro-rata consolidation. Our JOAs include The York Newspaper Company, Denver Newspaper Agency, and the Salt Lake City JOA for all periods presented, and Charleston Newspapers through May 7, 2004. See Notes 1 and 3 to the condensed consolidated financial statements for additional discussion and analysis of the GAAP accounting for our JOAs.

THE INFORMATION IN THE FOLLOWING TABLE IS NOT PRESENTED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND DOES NOT COMPLY WITH ARTICLE 11 OF REGULATION S-X FOR PRO
FORMA FINANCIAL DATA


	Three Months Ended December 31,									Six Months Ended December 31,
							2004 vs.									2004 vs.
	2004			2003			2003			2004			2003			2003
	(Dollars in thousands)
PRO-RATA CONSOLIDATED INCOME STATEMENT DATA:
Total Revenues	$	280,590		$	273,468			2.6	%	$	546,479		$	530,041			3.1	%

Cost of Sales		91,843			90,065			2.0			183,068			178,552			2.5
Selling, General and Administrative		129,037			122,034			5.7			259,828			246,347			5.5
Depreciation and Amortization		13,442			13,643			(1.5	)		26,972			27,521			(2.0	)
Interest Expense		12,156			14,061			(13.5	)		24,413			28,190			(13.4	)
Other (Income) Expense, Net		10			10,526			(99.9	)		5,667			14,970			(62.1	)

Total Costs and Expenses		246,488			250,329			(1.5	)		499,948			495,580			0.9

Minority Interest		(9,878	)		(9,571	)		3.2			(16,478	)		(15,873	)		3.8

Net Income		16,240			9,986			62.6			20,846			14,294			45.8

CASH FLOW DATA (GAAP BASIS):
Cash Flows from:
Operating Activities	$	33,122		$	13,521					$	40,596		$	32,383
Investing Activities		(16,946	)		(18,584	)					(18,476	)		(19,937	)
Financing Activities		(16,949	)		1,004						(85,424	)		(13,134	)

PRO-RATA OTHER DATA(a):
Adjusted EBITDA	$	59,710		$	61,369			(2.7	)%	$	103,583		$	105,142			(1.5	)%
Minority Interest in Adjusted EBITDA		(12,899	)		(12,999	)		(0.8	)		(22,164	)		(22,306	)		(0.6	)
EBITDA of Texas-New Mexico Newspapers Partnership(b)		2,743			2,977			(7.9	)		5,033			5,394			(6.7	)

Adjusted EBITDA Available to Company	$	49,554		$	51,347			(3.5	)%	$	86,452		$	88,230			(2.0	)%

See “Reconciliation of GAAP and Non-GAAP Financial Information — Reconciliation of Income Statement Data presented on a historical GAAP basis to Non-GAAP Income Statement Data presented on a pro-rata consolidation basis” and “Reconciliation of Cash Flows from Operating Activities (GAAP measure) to Adjusted EBITDA presented on a pro-rata consolidation basis (Non-GAAP measure)” for a reconciliation of Non-GAAP financial information.

(a)		See footnote (a) under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating Results” for discussion of Adjusted EBITDA, EBITDA of Texas-New Mexico Newspapers Partnership and Adjusted EBITDA Available to Company. The Minority Interest in Adjusted EBITDA shown above is calculated in the same manner as described in footnote (a) under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating Results” except that Minority Interest in Adjusted EBITDA shown here on a pro-rata basis includes only the minority interest in Adjusted EBITDA of the California Newspapers Partnership and The Denver Post Corporation, as pro-rata consolidation takes into account the minority interest associated with The York Newspaper Company through April 30, 2004 when we acquired The York Newspaper Company minority interest.

(b)		See footnote (b) under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating Results” for discussion of EBITDA of Texas-New Mexico Newspapers Partnership.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Critical Accounting Policies

The preparation of financial statements in accordance with generally accepted accounting principles at times requires the use of estimates and assumptions. We make our estimates based on historical experience, actuarial studies and other assumptions, as appropriate, to assess the carrying values of assets and liabilities and disclosure of contingent matters. We re-evaluate our estimates on an ongoing basis. Actual results could differ from these estimates. Critical accounting policies for us include revenue recognition; accounts receivable allowances; recoverability of our long-lived assets, including goodwill and other intangible assets, which are based on such factors as estimated future cash flows and current fair value estimates; and pension and retiree medical benefits, which require the use of various estimates concerning the work force, interest rates, plan investment return, and involve the use of advice from consulting actuaries. Our accounting for federal and state income taxes is sensitive to interpretation of various laws and regulations and the valuation of deferred tax assets. The notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2004 contain a more complete discussion of our significant accounting policies.

Advertising revenue is earned and recognized when advertisements are published, inserted, aired or displayed and are net of provisions for estimated rebates, credit and rate adjustments and discounts. Circulation revenue includes home delivery subscription revenue, single copy and third party sales. Single copy revenue is earned and recognized based on the date the publication is delivered to the single copy outlet, net of provisions for returns. Home delivery subscription revenue is earned and recognized when the newspaper is sold and delivered to the customer or sold to home delivery independent contractors. Amounts received in advance of an advertisement or newspaper delivery are deferred and recorded on the balance sheet as a current liability (“Unearned Income”) and recognized as revenue when earned.

Our investments in unconsolidated JOAs (Denver, Salt Lake and through May 7, 2004, Charleston) are included in the condensed consolidated balance sheet under the line item “Investment in Unconsolidated JOAs.” The operating results of our unconsolidated JOAs are reported as a single net amount, in the accompanying financial statements in the line item “Income from Unconsolidated JOAs.” This line item includes:

	•		Our proportionate share of net income from JOAs,

	•		The amortization of subscriber lists created by the original purchase by us of the JOAs’ interests as the subscriber lists are attributable to our earnings in the JOAs, and

	•		Editorial costs, miscellaneous revenue received outside of the JOA, and other charges incurred by our consolidated subsidiaries directly attributable to providing editorial content and news for our newspapers party to a JOA.

Seasonality

Newspaper companies tend to follow a distinct and recurring seasonal pattern, with higher advertising revenues in months containing significant events or holidays. Accordingly, the fourth calendar quarter, or our second fiscal quarter, is our strongest revenue quarter of the year. Due to generally poor weather and lack of holidays, the first calendar quarter, or our third fiscal quarter, is our weakest revenue quarter of the year.

Comparison of the Three and Six Months Ended December 31, 2004 and 2003

Certain transactions in fiscal year 2004 had an impact on the comparisons of our results for the three and six months ended December 31, 2004 and 2003. We restructured our interests in the Charleston JOA (effective May 7, 2004) and the York JOA (which included exercising our option to buy out the minority partner’s interest and purchasing the masthead of the York Daily Record effective April 30, 2004). We also purchased two weekly newspapers distributed in and around Long Beach, California: the Grunion Gazette and Downtown Gazette (January 2004).

Revenues

On a same newspaper basis (after adjusting for the aforementioned fiscal year 2004 Gazette transaction), the following changes occurred in our significant revenue categories for the three and six month periods ended December 31, 2004 as compared to the same periods in prior year.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Advertising Revenues. Advertising revenues increased by approximately 3.9% for both the three and six month periods ended December 31, 2004, as compared to the same periods in prior fiscal year. The increase in advertising revenue was due principally to increases in classified and preprint advertising categories, as well as increases in revenues from our Internet operations, offset in part by small decreases in retail and national advertising. For the three and six month periods ended December 31, 2004, employment and real estate classified advertising increased at the majority of our newspapers. However, gains in employment and real estate categories were somewhat offset by declines in automotive classified advertising.

Circulation Revenues. Circulation revenues decreased by 3.0% and 2.2% for the three and six month periods ended December 31, 2004 as compared to the same periods in prior fiscal year. The decrease was primarily due to competitive pricing pressures at some of our California newspapers, which resulted in our offering greater discounts to acquire new subscribers with long-term orders, as well as reducing our subscription rates to retain our current subscribers. In addition, we implemented strategic pricing efforts in Connecticut, which included offering discounts to new subscribers, in an attempt to achieve circulation volume goals.

Income from Unconsolidated JOAs

The aforementioned Charleston restructuring had the net impact of decreasing income from unconsolidated JOAs by $0.5 million and $0.9 million for the three and six months ended December 31, 2004. Excluding the impact of the Charleston restructuring, the decrease for the three and six months ended December 31, 2004 was primarily due to a decline in net income at the Denver JOA, offset in part by improved operating performance at the Salt Lake JOA. Revenues at the Denver JOA were flat and expenses were up 2.2% for the three months ended December 31, 2004 as compared to the prior year, while revenues and expenses were up 1.1% and 2.1%, respectively, for the six months ended December 31, 2004 as compared to the prior year. Revenues and expenses at the Salt Lake JOA both increased by 4.9% for the three months ended December 31, 2004 as compared to the prior year, while revenues and expenses were up 5.9% and 5.2%, respectively, for the six months ended December 31, 2004 as compared to the prior year. The results of the JOAs described above have been adjusted for the associated revenues and expenses described in our critical accounting policies.

Cost of Sales

The aforementioned York restructuring and weekly newspapers purchased in fiscal year 2004 had the net impact of increasing cost of sales by $1.1 million and $2.1 million for the three and six month periods ended December 31, 2004, as compared to the same periods in prior fiscal year. Excluding these transactions, cost of sales for the three and six month periods increased 1.5% and 2.0%, respectively. The current year increase in cost of sales was due in part to a 8.5% and 9.5% increase in our average price per metric ton of newsprint consumed for the three and six month periods ended December 31, 2004, as compared to the same periods in prior year. Our average price was approximately $523 and $520 per metric ton for the three and six month periods ended December 31, 2004, respectively, as compared to $482 and $475 per metric ton for the same periods in fiscal year 2004. Partially offsetting the impact of higher newsprint prices was a small decrease in our newsprint consumption.

Selling, General and Administrative

The aforementioned York restructuring and weekly newspapers purchased in fiscal year 2004 had the net impact of increasing SG&A by $0.7 million and $1.4 million for the three and six month periods ended December 31, 2004, as compared to the same periods in prior fiscal year. Excluding these transactions, SG&A increased 5.4% and 5.6%. The current year increase was primarily the result of increases in employee costs, including health care and retirement benefits, the curtailment of the pension plan at one of our subsidiaries, as well as increased costs directly associated with the growth in our advertising revenues and Internet operations. Expenses related to our Internet operations increased $0.4 million, or 13.9%, and $1.1 million, or 17.8%, respectively, for the three and six months ended December 31, 2004.

Interest Expense

The decrease in interest expense was the result of a decrease in average debt outstanding due to debt paydowns in fiscal year 2004 and continued paydowns in fiscal year 2005, as well as a reduction in the weighted average cost of debt in fiscal year 2005 compared to fiscal year 2004. For the three month period ended December 31, 2004, our average debt outstanding

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

decreased $29.8 million, or 3.3%, and our weighted average interest rate decreased 52 basis points, as compared to the same period in prior year. For the six month period ended December 31, 2004, our average debt outstanding decreased $24.7 million or 2.8%, and our weighted average interest rate decreased 64 basis points as compared to the same period in prior year. The lower weighted average cost of debt was a result of the November 2003 refinancing of our 8 3/4% Senior Subordinated Notes with our 6 7/8% Senior Subordinated Notes, the restructuring of our bank credit agreement (December 2003 and August 2004) and the July 2004 repurchase of our 8 5/8% Senior Subordinated Notes funded out of proceeds from our 6 3/8% Senior Subordinated Notes (issued in January 2004), and borrowings from our bank credit facility. These lower interest rates were offset in part by increases in LIBOR over the prior year (the average daily one month rate for LIBOR increased 101 and 75 basis points, respectively, for the three and six month periods ended December 31, 2004 as compared to the same periods in prior year), which is used to determine the interest rates under our bank credit facility. Interest expense was also favorably impacted in the prior year by net settlements related to our interest rate swap agreements. The net settlements of our interest rate swap agreements had the effect of decreasing interest expense by $0.9 million and $1.8 million for the three and six month periods ended December 31, 2003. We had no interest rate swap agreements during the three or six month periods ended December 31, 2004. Excluding the impact of the interest rate swaps in the prior year, our weighted average interest rate decreased by approximately 97 and 103 basis points, respectively.

Other (Income) Expense, Net

We include in other (income) expense, net costs or income items that are not related to current operations.

The charges incurred for the three month period ended December 31, 2004 relate to litigation expense of $0.2 million associated with the acquisition of Kearns-Tribune, LLC (Salt Lake City), $(0.7) million reduction related to the periodic change in the estimated cost to repurchase an option held by a third party to acquire one of our newspapers, $0.2 million related to hedging activities that did not qualify for hedge accounting under SFAS No. 133, and $0.3 million related to various other costs not related to ongoing operations.

The charges incurred for the six month period ended December 31, 2004 relate to litigation expense of $0.4 million associated with the acquisition of Kearns-Tribune, LLC (Salt Lake City), $(5.8) million change related to the periodic change in the estimated cost to repurchase an option held by a third party to acquire one of our newspapers, $9.2 million for the repurchase premiums and unamortized discounts associated with the early redemption of our 8 5/8% Notes, $0.4 million related to hedging activities that did not qualify for hedge accounting under SFAS No. 133, and $1.2 million related to various other costs not related to ongoing operations.

Liquidity and Capital Resources

Our sources of liquidity are existing cash and other working capital, cash flows provided from operating activities, distributions from JOAs and partnerships and the borrowing capacity under our bank credit facility. Our operations, consistent with the newspaper industry, require little investment in inventory, as less than 30 days of newsprint is generally maintained on hand. From time to time, we increase our newsprint inventories in anticipation of price increases. In general, our receivables have been collected on a timely basis.

The increase in net cash flows from operating activities of $8.2 million was largely attributable to an increase in distributions from unconsolidated JOAs and decreases in distributions paid to minority interest, offset in part by decreases associated with increased working capital, due principally to increases in accounts receivable and other current assets due to timing of cash receipts, increases in newsprint inventory in anticipation of future price increases, and timing of payments of accounts payable and accrued liabilities.

The net cash outflows related to investing activities improved by $1.5 million, primarily due to a $1.9 million decrease in net capital expenditures for the six months ended December 31, 2004 as compared to the corresponding period in the prior year. Approximately $12.0 million of the current year capital expenditures are related to our share of the costs associated with the construction of a new printing facility for the Salt Lake City JOA.

Net cash flows from financing activities for the six months ended December 31, 2004 included using cash on hand and available borrowings under the revolver portion of our credit facility to repurchase all of our outstanding $200.0 million

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

8 5/8% Senior Subordinated Notes for $208.6 million (including $8.6 million of repurchase premiums). In addition, activity for the six months ended December 31, 2004 included normal borrowings and paydowns on long-term debt. Prior year’s net paydown consisted of $291.9 million of net proceeds from the issuance of $300.0 million of our 6 7/8% Senior Subordinated Notes due 2013, which were used along with available borrowings to repurchase all of our outstanding $300.0 million 8 3/4% Senior Subordinated Notes due 2009 for $309.4 million (including $9.4 million of repurchase premiums) and the refinancing of our bank credit facility, as well as normal borrowings and paydowns on long-term debt. Total paydowns on long-term debt were $21.9 million, net of refinancing costs and repurchase premiums, for the six months ended December 31, 2004, as compared to $15.3 million for the same period in prior year.

Liquidity

On August 30, 2004, we amended and restated our December 30, 2003 bank credit facility to take advantage of lower pricing available in the bank loan market. Our amended bank credit facility provides for borrowings of up to $598.8 million, consisting of a $350.0 million revolving credit facility, a $100.0 million term loan “A” and a $148.8 million term loan “C.” During the next twelve months we will make scheduled quarterly principal payments of $0.4 million under term loan “C,” which we intend to pay from operating cash flows. Any payments on the term loan cannot be reborrowed, regardless of whether such payments are scheduled or voluntary. At December 31, 2004, the balances outstanding under the revolving credit portion of our bank credit facility, term loan “A” and term loan “C” were $126.0 million, $100.0 million and $148.0 million, respectively. As of December 31, 2004, we had $215.4 million available for future borrowings under the revolver portion of our new bank credit facility, net of $8.6 million in outstanding letters of credit.

In January 1998, we entered into an option agreement in association with the acquisition financing related to one of our newspapers. The option, which is currently exercisable or puttable based on a predetermined formula, entitles the holder to purchase the assets used in the publication of one of our daily newspapers. The option repurchase price at December 31, 2004 is valued at approximately $5.9 million and is recorded as a component of other long-term liabilities. If the option were put to us, the payment would be funded from unused commitments under our bank credit facility. As a result, in accordance with SFAS No. 6, Classification of Short-Term Obligations Expected to be Refinanced, the option repurchase price remains classified in our balance sheet as long-term.

The Denver Post Shareholders’ Agreement provides us with a call option on Media General’s 20% interest in The Denver Post Corporation. Our call option became exercisable on July 1, 2004 and expires June 30, 2005. The exercise price is based on the appraised fair market value of The Denver Post Corporation, less debt of The Denver Post Corporation. No amounts are recorded in our December 31, 2004 financial statements related to the call option. In January 2005, we delivered to Media General a notice exercising our call option. The Denver Post Shareholders’ Agreement provides that the closing of such transaction is to take place within 15 business days of the completion of the appraisal process. We currently anticipate that the closing will occur in the fourth quarter of fiscal year 2005.

Stephens Media Group (“SMG”), a 26.28% partner in the California Newspapers Partnership (“CNP”), has a right to require CNP to redeem its interest in CNP, at its fair market value (plus interest through closing), any time after January 1, 2005. If such right is exercised, SMG’s interest must be redeemed within two years of the determination of its fair market value. We are not currently aware of any intentions on the part of SMG to exercise its put. No amounts are recorded in our financial statements related to SMG’s put right.

Our ability to service our debt and fund planned capital expenditures depends on our ability to generate operating cash flows in the future. Based on current levels, we believe our cash flow from operations, cash on hand and borrowings available under our bank credit facility will be adequate to meet our future liquidity needs for at least the next twelve months.

We estimate minimum contributions to our defined benefit pension plans in fiscal year 2005 will be approximately $2.0 million to $3.0 million, of which $1.3 million has been made through December 31, 2004. We also expect federal and state income tax payments to increase during fiscal year 2005 related to the impact of alternative minimum taxes. We have paid approximately $4.5 million in federal and state income tax payments through December 31, 2004 and estimate we will pay an additional $6.0 million to $8.0 million through the end of our fiscal year 2005, as compared to $1.8 million in fiscal year 2004.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Off-Balance Sheet Arrangements and Contractual Obligations

Our various contractual obligations and funding commitments related to our long-term debt have changed since our Annual Report on Form 10-K for the year ended June 30, 2004 as more fully described above and in Note 6: Long-Term Debt of our notes to the condensed consolidated financial statements.

Our other contractual obligations have not materially changed from the disclosure made in our Annual Report on Form 10-K for the year ended June 30, 2004, except for a purchase commitment we entered into with SP Newsprint Co. beginning January 1, 2005 (24,000 metric tons) for calendar year 2005 and continuing through December 31, 2009 (36,000 metric tons per year for calendar years 2006-2009). Tons purchased will be at market prices.

Additionally, as discussed under “Liquidity,” on January 24, 2005, the Company delivered notice to Media General of exercise of its call option to purchase Media General’s 20% interest in The Denver Post Corporation.

Capital Expenditures


	Capital Expenditures
	Six Months Ended December 31, 2004
	(Dollars in thousands)
	Wholly-Owned
	Subsidiaries and		Non Wholly-Owned			Our Share of
	Consolidated JOAs		Subsidiaries			Unconsolidated JOAs			Total
Total Capital Projects	$	16,459	$	4,971		$	1,162		$	22,592

Less Minority Partners’ Share		—		(2,252	)		(232	)		(2,484	)

Our Share of Capital Projects	$	16,459	$	2,719		$	930		$	20,108

Near Term Outlook

Newsprint Prices

In July 2004, newsprint suppliers announced a $50 per metric ton increase to be effective September 1, 2004. Newsprint suppliers were only able to implement part of the announced increase, and we began to pay a $20 price increase beginning in January 2005. In December 2004, newsprint suppliers announced another price increase of $35 per metric ton to be effective March 1, 2005. However, we are uncertain as to how much, if any, of the March 1, 2005 price increase will take hold in the market. The January 2005 RISI (“Resource Information Systems, Inc.”) price index for 30 pound newsprint was $570 per metric ton compared to $515 per metric ton in January 2004. As a large buyer of newsprint, our cost of newsprint continues to be below the RISI price index.

QUANTITATIVE AND QUALITATIVE
DISCLOSURE OF MARKET RISK

Debt

We are exposed to market risk arising from changes in interest rates associated with our bank debt, which includes a bank term loan and bank credit facility.

The following table provides information about our debt obligations that are sensitive to changes in interest rates. The table presents principal cash flows and related weighted-average interest rates by expected maturity dates. Weighted-average variable rates are based on implied forward rates as derived from appropriate annual spot rate observations as of December 31, 2004.

Interest Rate Sensitivity
Principal or Notional Amount by Expected Maturity
Average Interest Rate


	Years Ended June 30,																					Fair Value December 31,
	2005(a)			2006			2007			2008			2009			Thereafter			Total			2004
													(Dollars in thousands)
Liabilities
Long-Term Debt including Current Portion
Fixed Rate	$	—		$	—		$	—		$	—		$	—		$	446,340		$	446,340		$	456,000
Average Interest Rate		6.45	%		6.45	%		6.45	%		6.45	%		6.45	%		6.45	%

Variable Rate	$	744		$	1,488		$	1,488		$	11,488		$	26,488		$	332,310		$	374,006		$	374,006
Average Interest Rate		4.04	%		4.04	%		4.04	%		4.04	%		4.04	%		4.04	%

Total																			$	820,346	(b)

(a)		June 30, 2005 is only reflective of the amount due in the six months remaining in fiscal year 2005.

(b)		The long-term debt (including current portion) of $820.3 million from the Market Risk table above differs from total long-term debt of $846.3 million reported in Note 6: Long-Term Debt of the notes to the condensed consolidated financial statements due to $26.0 million related to various notes payable due through 2013. The Market Risk table above excludes these long-term obligations as we could not practicably estimate fair value due to the lack of quoted market prices for these types of instruments and our inability to estimate the fair value without incurring the excessive costs of obtaining an appraisal.

Newsprint

See Near Term Outlook for further discussion regarding newsprint prices.

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION

Reconciliation of GAAP and Non-GAAP Financial Information

The following tables have been provided to reconcile the Non-GAAP financial information (Adjusted EBITDA and Pro-Rata Consolidation Income Statement Data) presented under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary Supplemental Non-GAAP Financial Data” of this report on Form 10-Q to their most directly comparable GAAP measures (Cash Flows from Operating Activities and GAAP Income Statement Data).

Reconciliation of Cash Flows from Operating Activities (GAAP measure) to Adjusted EBITDA (Non-GAAP measure).


	Three Months Ended December 31,						Six Months Ended December 31,
	2004			2003			2004			2003
				(Dollars in thousands)
NON-GAAP FINANCIAL DATA(a)
Cash Flows from Operating Activities (GAAP measure)	$	33,122		$	13,521		$	40,596		$	32,383

Net Change in Operating Assets and Liabilities		14,475			24,066			29,029			26,470
Distributions Paid to Minority Interest		4,546			8,430			12,342			17,129
Distributions from Unconsolidated JOAs		(30,126	)		(19,726	)		(47,590	)		(37,791	)
Interest Expense		12,103			14,010			24,319			28,088
Bad Debt Expense		(2,152	)		(1,885	)		(4,368	)		(4,154	)
Pension Expense, Net of Cash Contributions		(190	)		(388	)		(498	)		(549	)
Direct Costs of the Unconsolidated JOAs, Incurred Outside of the Unconsolidated JOAs(b)		12,414			11,782			24,369			23,195
Net Cash Related to Other (Income), Expense		2,495			(1,560	)		3,461			328

Adjusted EBITDA		46,687			48,250			81,660			85,099
Minority Interest in Adjusted EBITDA		(12,899	)		(15,351	)		(22,164	)		(26,626	)
Combined Adjusted EBITDA of Unconsolidated JOAs		13,023			15,471			21,923			24,363
EBITDA of Texas-New Mexico Newspapers Partnership(c)		2,743			2,977			5,033			5,394

Adjusted EBITDA Available to Company	$	49,554		$	51,347		$	86,452		$	88,230

		Footnotes for table above.

(a)		Non-GAAP Financial Data. Adjusted EBITDA and Adjusted EBITDA Available to Company are not measures of performance recognized under GAAP. However, we believe that they are indicators and measurements of our leverage capacity and debt service ability. Adjusted EBITDA and Adjusted EBITDA Available to Company should not be considered as an alternative to measure profitability, liquidity, or performance, nor should they be considered an alternative to net income, cash flows generated by operating, investing or financing activities, or other financial statement data presented in our condensed consolidated financial statements. Adjusted EBITDA is calculated by deducting cost of sales and SG&A expense from total revenues. Adjusted EBITDA Available to Company is calculated by: (i) reducing Adjusted EBITDA by the minorities’ interest in the Adjusted EBITDA generated from the California Newspapers Partnership, The Denver Post Corporation, and through April 30, 2004, The York Newspaper Company, our less than 100% owned consolidated subsidiaries (“Minority Interest in Adjusted EBITDA”); (ii) increasing Adjusted EBITDA by our combined proportionate share of the Adjusted EBITDA generated by our unconsolidated JOAs in Denver, Salt Lake City and, through May 7, 2004, Charleston (“Combined Adjusted EBITDA of Unconsolidated JOAs”); and (iii) increasing Adjusted EBITDA by our proportionate share of EBITDA of the Texas-New Mexico Newspapers Partnership (see footnote c).

(b)		Direct Costs of the Unconsolidated JOAs Incurred Outside of the Unconsolidated JOA. Includes the editorial costs, revenues received outside of the JOAs, depreciation, amortization, and other direct costs incurred outside of the JOAs by our consolidated subsidiaries associated with The Salt Lake Tribune, The Denver Post, and through May 7, 2004, the Charleston Daily Mail. See Note 1: Significant Accounting Policies and Other Matters — Joint Operating Agencies and Note 3: Joint Operating Agencies in the footnotes to our condensed consolidated financial statements for further description and analysis of this adjustment.

(c)		EBITDA of Texas-New Mexico Newspapers Partnership. The Texas-New Mexico Newspapers Partnership agreement requires the partnership to make distributions equal to the earnings of the partnership before depreciation and amortization (EBITDA). EBITDA of Texas-New Mexico Newspapers Partnership has been included in Adjusted EBITDA Available to Company, as it is an integral part of our cash flows from operations as defined by our debt covenants. Previously, we had included distributions from the Texas-New Mexico Newspapers Partnership in Adjusted EBITDA Available to Company. However, now we include our 33.8% share of the EBITDA of Texas-New Mexico Newspapers Partnership. This change was made in order to better conform to the definition of operating cash flows in our debt agreements. All periods presented reflect this change.

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION

Reconciliation of Income Statement Data presented on a historical GAAP basis to Non-GAAP Income Statement Data presented on a pro-rata consolidation basis. Dollar amounts shown are in thousands.


	Three Months Ended December 31, 2004
				Adjustment to
				Eliminate 42.5%		Unconsolidated
	As Presented			Minority Interest		JOAs Pro-Rata			As Presented on a
	Under GAAP			in York JOA(1)		Adjustment(2)			Pro-Rata Basis
Total Revenues	$	201,616		$	—	$	78,974		$	280,590

Income from Unconsolidated JOAs		9,590			—		(9,590	)		—

Cost of Sales		60,964			—		30,879			91,843
Selling, General and Administrative		93,965			—		35,072			129,037
Depreciation and Amortization		10,108			—		3,334			13,442
Interest Expense		12,103			—		53			12,156
Other (Income) Expense, Net		(36	)		—		46			10

Total Costs and Expenses		177,104			—		69,384			246,488

Minority Interest		(9,878	)		—		—			(9,878	)

Net Income		16,240			—		—			16,240

Adjusted EBITDA	$	46,687		$	—	$	13,023		$	59,710


	Six Months Ended December 31, 2004
				Adjustment to
				Eliminate 42.5%		Unconsolidated
	As Presented			Minority Interest		JOAs Pro-Rata			As Presented on a
	Under GAAP			in York JOA(1)		Adjustment(2)			Pro-Rata Basis
Total Revenues	$	393,269		$	—	$	153,210		$	546,479

Income from Unconsolidated JOAs		14,806			—		(14,806	)		—

Cost of Sales		121,725			—		61,343			183,068
Selling, General and Administrative		189,884			—		69,944			259,828
Depreciation and Amortization		20,217			—		6,755			26,972
Interest Expense		24,319			—		94			24,413
Other (Income) Expense, Net		5,399			—		268			5,667

Total Costs and Expenses		361,544			—		138,404			499,948

Minority Interest		(16,478	)		—		—			(16,478	)

Net Income		20,846			—		—			20,846

Adjusted EBITDA	$	81,660		$	—	$	21,923		$	103,583


	Three Months Ended December 31, 2003
				Adjustment to
				Eliminate 42.5%			Unconsolidated
	As Presented			Minority Interest			JOAs Pro-Rata			As Presented on a
	Under GAAP			in York JOA(1)			Adjustment(2)			Pro-Rata Basis
Total Revenues	$	195,639		$	(4,928	)	$	82,757		$	273,468

Income from Unconsolidated JOAs		10,974			—			(10,974	)		—

Cost of Sales		58,998			(1,008	)		32,075			90,065
Selling, General and Administrative		88,391			(1,568	)		35,211			122,034
Depreciation and Amortization		9,825			(63	)		3,881			13,643
Interest Expense		14,010			(23	)		74			14,061
Other (Income) Expense, Net		10,094			(110	)		542			10,526

Total Costs and Expenses		181,318			(2,772	)		71,783			250,329

Minority Interest		(11,727	)		2,156			—			(9,571	)

Net Income		9,986			—			—			9,986

Adjusted EBITDA	$	48,250		$	(2,352	)	$	15,471		$	61,369

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION


	Six Months Ended December 31, 2003
				Adjustment to
				Eliminate 42.5%			Unconsolidated
	As Presented			Minority Interest			JOAs Pro-Rata			As Presented on a
	Under GAAP			in York JOA(1)			Adjustment(2)			Pro-Rata Basis
Total Revenues	$	380,716		$	(9,479	)	$	158,804		$	530,041

Income from Unconsolidated JOAs		15,743			—			(15,743	)		—

Cost of Sales		117,202			(1,970	)		63,320			178,552
Selling, General and Administrative		178,415			(3,189	)		71,121			246,347
Depreciation and Amortization		20,050			(208	)		7,679			27,521
Interest Expense		28,088			(48	)		150			28,190
Other (Income) Expense, Net		14,228			(49	)		791			14,970

Total Costs and Expenses		357,983			(5,464	)		143,061			495,580

Minority Interest		(19,888	)		4,015			—			(15,873	)

Net Income		14,294			—			—			14,294

Adjusted EBITDA	$	85,099		$	(4,320	)	$	24,363		$	105,142

		Footnotes for preceding tables.

(1)		Adjustment to Eliminate 42.5% Minority Interest in York JOA. Eliminates The York Newspaper Company JOA minority partner’s 42.5% share from the individual line items with a corresponding adjustment to GAAP minority interest through April 30, 2004. Effective April 30, 2004, we acquired the minority interest in The York Newspaper Company. The difference between the minority interest adjustment provided in the reconciliation of Cash Flows from Operating Activities (GAAP measure) to Adjusted EBITDA presented on a pro-rata consolidation basis (non-GAAP measure) and the pro-rata minority interest adjustment above is that certain items (Depreciation and Amortization, Interest Expense and Other (Income) Expense, Net) are excluded from Minority Interest in Adjusted EBITDA.

(2)		Unconsolidated JOAs Pro-Rata Adjustment. The adjustment to pro-rata consolidate our unconsolidated JOAs includes our proportionate share, on a line item basis, of the income statements of our unconsolidated JOAs. Our interest in the earnings of Newspaper Agency Corporation (Salt Lake City) is 58%, while our interests in Denver Newspaper Agency and Charleston Newspapers (through May 7, 2004) are 50%. This adjustment also includes the editorial costs, revenues received outside of the JOA, depreciation, amortization, and other direct costs incurred outside of the JOAs by our consolidated subsidiaries associated with The Salt Lake Tribune, The Denver Post, and the Charleston Daily Mail (through May 7, 2004). See Note 1: Significant Accounting Policies and Other Matters — Joint Operating Agencies and Note 3: Joint Operating Agencies in the footnotes to our condensed consolidated financial statements for further description and analysis of the components of this adjustment.

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION

Reconciliation of Cash Flows from Operating Activities (GAAP measure) to Adjusted EBITDA presented on a pro-rata consolidation basis (Non-GAAP measure).


	Three Months Ended December 31,						Six Months Ended December 31,
	2004			2003			2004			2003
				(Dollars in thousands)
NON-GAAP FINANCIAL DATA(a)
Cash Flows from Operating Activities (GAAP measure)	$	33,122		$	13,521		$	40,596		$	32,383

Net Change in Operating Assets and Liabilities		14,475			24,066			29,029			26,470
Distributions Paid to Minority Interest		4,546			8,430			12,342			17,129
Distributions from Unconsolidated JOAs		(30,126	)		(19,726	)		(47,590	)		(37,791	)
Interest Expense		12,103			14,010			24,319			28,088
Bad Debt Expense		(2,152	)		(1,885	)		(4,368	)		(4,154	)
Pension Expense, Net of Cash Contributions		(190	)		(388	)		(498	)		(549	)
Net Cash Related to Other (Income), Expense		2,495			(1,560	)		3,461			328
Combined Adjusted EBITDA of Unconsolidated JOAs(b)		13,023			15,471			21,923			24,363
Direct Costs of the Unconsolidated JOAs, Incurred Outside of the Unconsolidated JOAs(c)		12,414			11,782			24,369			23,195
Minority Interest in Adjusted EBITDA of The York Newspaper Company (d)		—			(2,352	)		—			(4,320	)

Adjusted EBITDA		59,710			61,369			103,583			105,142
Minority Interest in Adjusted EBITDA		(12,899	)		(12,999	)		(22,164	)		(22,306	)
EBITDA of Texas-New Mexico Newspapers Partnership(e)		2,743			2,977			5,033			5,394

Adjusted EBITDA Available to Company	$	49,554		$	51,347		$	86,452		$	88,230

		Footnotes for table above.

(a)		Non-GAAP Financial Data. Adjusted EBITDA and Adjusted EBITDA Available to Company are not measures of performance recognized under GAAP. However, we believe that they are indicators and measurements of our leverage capacity and debt service ability. Adjusted EBITDA and Adjusted EBITDA Available to Company should not be considered as an alternative to measure profitability, liquidity, or performance, nor should they be considered an alternative to net income, cash flows generated by operating, investing or financing activities, or other financial statement data presented in our condensed consolidated financial statements. Adjusted EBITDA is calculated by deducting cost of sales and SG&A expense from total revenues. Adjusted EBITDA Available to Company is calculated by: (i) reducing Adjusted EBITDA by the minorities’ interest in the Adjusted EBITDA generated from the California Newspapers Partnership and The Denver Post Corporation, our less than 100% owned consolidated subsidiaries (“Minority Interest in Adjusted EBITDA”); (ii) increasing Adjusted EBITDA by our proportionate share of EBITDA of the Texas-New Mexico Newspapers Partnership (see footnote e). Note that pro-rata consolidation already takes into account our proportionate share of the results from our unconsolidated JOAs and takes into account the minority interest associated with The York Newspaper Company, through April 30, 2004 when we acquired The York Newspaper Company minority interest.

(b)		Combined Adjusted EBITDA of Unconsolidated JOAs. Calculated by deducting cost of sales and SG&A expense from total revenues from the Unconsolidated JOAs Pro-Rata Adjustment column presented under “- Reconciliation of Income Statement Data presented on a historical GAAP basis to Non-GAAP Income Statement Data presented on a pro-rata consolidation basis.”

(c)		Direct Costs of the Unconsolidated JOAs Incurred Outside of the Unconsolidated JOA. Includes the editorial costs, revenues received outside of the JOA, depreciation, amortization, and other direct costs incurred outside of the JOAs by our consolidated subsidiaries associated with The Salt Lake Tribune, The Denver Post, and through May 7, 2004, the Charleston Daily Mail. See Note 1: Significant Accounting Policies and Other Matters — Joint Operating Agencies and Note 3: Joint Operating Agencies in the footnotes to our condensed consolidated financial statements for further description and analysis of this adjustment.

(d)		Minority Interest in Adjusted EBITDA of The York Newspaper Company is calculated as total revenues, less cost of sales and SG&A expense from the Adjustment to Eliminate 42.5% Minority Interest in York JOA column presented under “- Reconciliation of Income Statement Data presented on a historical GAAP basis to Non-GAAP Income Statement Data presented on a pro-rata consolidation basis.”

(e)		EBITDA of Texas-New Mexico Newspapers Partnership. The Texas-New Mexico Newspapers Partnership agreement requires the partnership to make distributions equal to the earnings of the partnership before depreciation and amortization (EBITDA). EBITDA of Texas-New Mexico Newspapers Partnership has been included in Adjusted EBITDA Available to Company, as it is an integral part of our cash flows from operations as defined by our debt covenants. Previously, we had included distributions from the Texas-New Mexico Newspapers Partnership in Adjusted EBITDA Available to Company. However, now we include our 33.8% share of the EBITDA of Texas-New Mexico Newspapers Partnership. This change was made in order to better conform to the definition of operating cash flows in our debt agreements. All periods presented reflect this change.

EXHIBIT INDEX

Exhibits


3.1		Second Restated and Amended Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the registrant’s Form 8-K filed January 14, 2004)

3.2		Amended and Restated Bylaws of MediaNews Group, Inc. (incorporated by reference to Exhibit 3.2 to the registrant’s June 30, 2004 Form 10-K)

4.1		Registration Rights Agreement dated May 20, 1994, between Affiliated Newspapers Investments, Inc. (the predecessor to the registrant) and BT Securities Corporation (incorporated by reference to Exhibit 4.3 to Form S-1/A of Affiliated Newspapers Investments, Inc., filed May 6, 1994 (File No. 33-75158))

4.2		Indenture dated as of November 25, 2003 between MediaNews Group, Inc., as Issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.4 to the registrant’s Form 8-K filed January 14, 2004)

4.3		Registration Rights Agreement dated as of November 25, 2003 between MediaNews Group, Inc., as Issuer, and Deutsche Bank Securities, Inc., Banc of America Securities LLC, Wachovia Capital Markets, LLC, BNY Capital Markets, Inc., Fleet Securities, Inc. and McDonald Investments, Inc., (incorporated by reference to Exhibit 4.2 to the registrant’s Form 10-Q for the period ended December 31, 2003)

4.4		Form of MediaNews Group, Inc.’s 6 7/8% Senior Subordinated Notes due 2013 (contained in the Indenture filed as Exhibit 4.4 to the registrant’s Form 8-K filed January 14, 2004)

4.5		Indenture dated as of January 26, 2004 between MediaNews Group, Inc., as Issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.4 to the registrant’s Form 10-Q for the period ended December 31, 2003)

4.6		Registration Rights Agreement dated as of January 26, 2004 between MediaNews Group, Inc., as Issuer, and Deutsche Bank Securities Inc., Banc of America Securities LLC, Wachovia Capital Markets, LLC, Credit Lyonnais Securities (USA) Inc., and Stephens Inc. (incorporated by reference to Exhibit 4.5 to the registrant’s Form 10-Q for the period ended December 31, 2003)

4.7		Form of MediaNews Group, Inc.’s 6 3/8% Senior Subordinated Notes due 2014 (contained in the Indenture filed as Exhibit 4.5)

10.1		Stock Purchase Agreement dated January 4, 2005, by and among MediaNews Group, Inc., as purchasers, and Diversified Suburban Newspapers, Inc., as sellers

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.3		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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MEDIANEWS GROUP INC 10-Q