e10vk

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 2007

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission File Number 033-75156

MEDIANEWS GROUP, INC.

(Exact name of registrant as specified in its charter)


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

101 W. Colfax, Denver, Colorado (Address of principal executive offices)		80202 (Zip Code)

Registrant’s telephone number, including area code: (303) 954-6360

Securities registered pursuant to Section 12(b) of the Act:
NONE

Securities registered pursuant to Section 12(g) of the Act:
NONE

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

Indicate by check mark if the registrant is not required to file reports to Section 13 or Section 15(d) of the Act. Yes X No ___

Indicate by check mark whether the registrant (1) has filed all reports 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X

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

Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ___ No X

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Not applicable as there is no active market for our common equity.

The number of shares outstanding of the registrant’s common stock as of September 28, 2007 was 2,276,846.

Documents Incorporated By Reference: None

*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, 2007 pursuant to Section 15(d) of the Securities Exchange Act of 1934. The registrant is filing this Annual Report on Form 10-K on a voluntary basis.

Item 1: Business

General

MediaNews Group, Inc. (“MediaNews” or “the Company”), a Delaware Corporation, was founded in March 1985. We are the largest privately-owned newspaper company in the United States in terms of daily paid circulation. We publish 57 daily and approximately 95 non-daily newspapers in 12 states, including suburban markets in close proximity to the San Francisco Bay area, Los Angeles, New York, Baltimore, Boston and El Paso. We also own metropolitan daily newspapers in San Jose, St. Paul, Denver, Salt Lake City and Detroit (the last three of which operate under joint operating agency (“JOA”) agreements). The newspapers we currently control had combined daily and Sunday paid circulation of approximately 2.6 million and 2.9 million, respectively, as of March 31, 2007. We have grown primarily through strategic acquisitions, partnerships and, to a lesser extent, internal growth. One of our key growth strategies is geographic clustering. This strategy involves acquiring newspapers, or partnering with newspapers, in markets contiguous to those in which we already operate. Clustering has allowed us to realize substantial revenue synergies and cost efficiencies, resulting in higher operating cash flow growth at those newspapers than they would have achieved on a stand-alone basis. The majority of our fiscal year 2007 acquisitions and joint ventures were consistent with our clustering strategy.

Our newspapers are generally positioned in markets with limited direct competition for local daily newspaper advertising. Start-ups of new daily newspapers in suburban markets with pre-existing local newspapers are infrequent. We believe that our newspaper markets, taken as a whole, have above average population and sales growth potential. Most suburban and small city daily newspapers we own have the leading or sole distribution in the markets they serve. Suburban newspapers address the specific needs of a community by publishing a broad spectrum of local news as well as advertiser-specific editions which television, because of its broader geographic coverage, is unwilling or unable to provide. Thus, in many communities, the local newspaper provides a combination of social and economic services in a way that only it can, making it attractive for both consumers and advertisers. Our suburban newspapers generate the majority of their revenues from local retail, classified and circulation sales, which we believe are less affected by national economic trends and therefore tend to provide a more stable base of operating cash flow. Metropolitan newspapers generate significant revenues from high margin national and employment advertising, which is strongly influenced by national and local economic conditions and trends. Our metropolitan newspapers also tend to face greater competition for advertising from television, radio, cable and national Internet sites than do our suburban newspapers. However, our metropolitan newspapers continue to capture the largest share of locally available advertising dollars by providing the most comprehensive local news available in their markets.

In conjunction with several of our daily newspapers, we operate sizeable weekly newspaper groups that extend our reach and advertising opportunities in and around our daily newspaper markets. Suburban weekly newspapers allow us to attract a different base of advertisers than our paid daily newspapers, such as small local retailers, local classifieds and restaurants, which improves our competitive positioning, reduces the threat of competition from direct mail and shoppers (free circulars) and achieves greater household penetration in our newspaper markets. Our largest suburban weekly newspaper groups operate in conjunction with our San Francisco Bay Area Newspapers Group, the Los Angeles Newspapers Group and Connecticut Post.

In addition to selling advertising in our core newspaper product, our two other major revenue drivers include Internet advertising and advertising in niche publications, such as those related to home improvement, health and fitness and weddings. Our niche publications are designed to reach a highly targeted audience and to appeal to non-traditional newspaper advertisers. In addition, our niche publications will provide valuable content which will expand our Internet offerings. We are developing new local Web sites, in addition to our local news Web sites, designed to provide a more comprehensive source of local information and services and new advertising opportunities.

The following sets forth our paid daily newspapers:


California		Massachusetts
Daily News, Los Angeles, CA		The Sun, Lowell, MA
Press-Telegram, Long Beach, CA		The Berkshire Eagle, Pittsfield, MA
The Monterey County Herald, Monterey, CA^(a)		Sentinel & Enterprise, Fitchburg, MA
The Daily Breeze, Torrance, CA^(a)		North Adams Transcript, North Adams, MA
California Newspapers Partnership — 54.23%-owned partnership
San Gabriel Valley Newspaper Group, CA		Michigan
San Gabriel Valley Tribune, West Covina, CA		The Detroit News, Detroit, MI (JOA)^(b)
Pasadena Star-News, Pasadena, CA
Whittier Daily News, Whittier, CA		Minnesota
The Sun, San Bernardino, CA		Pioneer Press, St. Paul, MN^(a)
Inland Valley Daily Bulletin, Ontario, CA
East Bay Newspapers, San Francisco Bay Area, CA		Utah
Contra Costa Times, Walnut Creek, CA		The Salt Lake Tribune, Salt Lake City, UT (JOA)
Oakland Tribune, Oakland, CA
Tri-Valley Herald, Pleasanton, CA
The Daily Review, Hayward, CA		Vermont
The Argus, Fremont, CA		Brattleboro Reformer, Brattleboro, VT
Alameda Times-Star, Alameda, CA		Bennington Banner, Bennington, VT
San Mateo County Times, San Mateo, CA
Marin Independent Journal, Marin, CA		West Virginia
Enterprise-Record, Chico, CA		Charleston Daily Mail, Charleston, WV^(b)
Oroville Mercury-Register, Oroville, CA
Times-Herald, Vallejo, CA		Texas-New Mexico Newspapers Partnership - 59.4%-owned
Times-Standard, Eureka, CA		partnership
The Reporter, Vacaville, CA		Texas
Daily Democrat, Woodland, CA		El Paso Times, El Paso, TX
The Ukiah Daily Journal, Ukiah, CA		New Mexico
Redlands Daily Facts, Redlands, CA		Las Cruces Sun-News, Las Cruces, NM
Lake County Record-Bee, Lakeport, CA		The Daily Times, Farmington, NM
Red Bluff Daily News, Red Bluff, CA		Carlsbad Current-Argus, Carlsbad, NM
San Jose Mercury News, San Jose, CA		Alamogordo Daily News, Alamogordo, NM
Santa Cruz Sentinel, Santa Cruz, CA		The Deming Headlight, Deming, NM
		Pennsylvania
		York Daily Record & The York Dispatch, York, PA (JOA)
Colorado		Lebanon Daily News, Lebanon, PA
The Denver Post, Denver, CO (JOA)		The Evening Sun, Hanover, PA
Prairie Mountain Publishing Company, CO- 50%-owned partnership		Public Opinion, Chambersburg, PA
The Fort Morgan Times, Fort Morgan, CO
Journal-Advocate, Sterling, CO
Lamar Daily News, Lamar, CO
Daily Camera, Boulder, CO

Connecticut
Connecticut Post, Bridgeport, CT
The News-Times, Danbury, CT^(a)


(a)		We manage these newspapers for The Hearst Corporation.

(b)		We are only responsible for editorial and news content.

Industry Background

Newspaper publishing is the oldest and largest segment of the media industry. Newspapers address the specific needs of readers and advertisers in the communities they serve by publishing a broad spectrum of local news as well as special editions that are targeted to specific advertisers and readers. In most communities, the local newspaper provides the primary voice for local news and information, including business, sports, government and social as well as political commentary, making a newspaper’s content attractive to both readers and advertisers. We believe that the local newspaper’s close relationship with its readers and the community is one of the primary reasons why newspapers remain a dominant medium for local advertising, accounting for approximately 40% of all local media advertising expenditures in the United States in calendar year 2006.⁽¹⁾

We believe that, due to continuing fragmentation of other advertising mediums, newspapers are one of the last mass market mediums available for advertisers in a local market. In addition, newspapers are one of the few forms of mass media used by readers for both editorial and advertising content. Readers of newspapers also tend to be more highly educated and have higher incomes than non-newspaper readers, with a recent survey showing approximately 55% of college graduates and 56% of households with incomes greater than $75,000 read a daily newspaper.⁽¹⁾ Because of the desirable demographics and local mass market reach of daily newspapers, we believe that newspapers represent the most cost-effective means for advertisers to reach a broad and affluent spectrum of consumers.

With the exception of a few of the largest cities, most cities in the United States do not have more than one daily newspaper.

Recent Transactions

Acquisition (San Jose Mercury News, Contra Costa Times, The Monterey County Herald and Pioneer Press)

On August 2, 2006, we and The McClatchy Company (“McClatchy”) consummated the closing under a Stock and Asset Purchase Agreement dated as of April 26, 2006, pursuant to which the California Newspapers Partnership (“CNP”), a 54.23% subsidiary of ours, purchased the Contra Costa Times and the San Jose Mercury News and related publications and Web sites for $736.8 million. The acquisition, including estimated fees, was funded in part with contributions of $340.1 million from our partners in CNP ($337.2 million was paid by the partners directly to McClatchy). Our share of the acquisition, including estimated investment banking fees, was approximately $403.0 million and was funded with borrowings under a term loan “C” and our bank revolver (see “Recent Transactions – Debt”). The $403.0 million acquisition cost excludes cash acquired and other deal costs (principally legal and accounting).

On August 2, 2006, The Hearst Corporation (“Hearst”) and McClatchy consummated the closing under a Stock and Asset Purchase Agreement dated as of April 26, 2006, pursuant to which Hearst purchased The Monterey County Herald and the St. Paul Pioneer Press and related publications and Web sites for $263.2 million. See Hearst Stock Purchase Agreement below.

Acquisition (Torrance)

On December 15, 2006, Hearst acquired the Daily Breeze and three weekly newspapers, published in Torrance, California for approximately $25.9 million, which included $1.1 million of working capital. See Hearst Stock Purchase Agreement below.

Hearst Stock Purchase Agreement

On August 2, 2006, we and Hearst entered into a Stock Purchase Agreement, which was amended on May 1, 2007 (the “MediaNews/Hearst Agreement”) pursuant to which (i) Hearst agreed to make an equity investment of approximately $299.4 million (subject to adjustment under certain circumstances) in us (such investment will not include any governance or economic rights or interest in the Company’s publications in the San Francisco Bay area or “Bay Area” assets) and (ii) we



⁽¹⁾		Source: Newspaper Association of America

have agreed to purchase from Hearst The Monterey County Herald, the St. Paul Pioneer Press and Daily Breeze (Torrance) with a portion of the Hearst equity investment in us. The equity investment will afford Hearst an equity interest of approximately 30% (subject to adjustment in certain circumstances) in us, excluding our economic interest in the San Francisco Bay area newspapers. The equity investment by Hearst in us is under review by the Antitrust Division of the Department of Justice. The Antitrust Division has requested information in connection with this review, and we and Hearst have completed our response to that request. The mandatory thirty day waiting period to consummate the transaction will expire on October 18, 2007. We have agreed to manage The Monterey County Herald, the St. Paul Pioneer Press and the Torrance Daily Breeze during the period of their ownership by Hearst. Under the MediaNews/Hearst Agreement, we have all the economic risks and rewards associated with ownership of these newspapers and retain all of the cash flows generated by them as a management fee. As a result, we began consolidating the financial statements of The Monterey County Herald and St. Paul Pioneer Press beginning August 2, 2006 and the Torrance Daily Breeze beginning December 15, 2006. We also agreed that, at the election of us or Hearst, we will purchase The Monterey County Herald, the St. Paul Pioneer Press and the Torrance Daily Breeze, for $290.6 million (plus reimbursement of Hearst’s costs and cost of funds in respect of its purchase of such newspapers) if for any reason Hearst’s equity investment in us is not consummated. If we are required to purchase these newspapers from Hearst without an equity investment by Hearst, we would need to obtain additional financing to fund this purchase and/or seek alternative financing arrangements with Hearst or another party. As of June 30, 2007, we have recorded an obligation of $306.5 million related to the possible Hearst acquisition cost of $290.6 million and the $15.9 million accretion of Hearst’s cost of funds related to these purchases. If the Hearst equity investment is consummated, the acquisition cost obligation will be reclassified into shareholders’ equity and the impact of the accretion of Hearst’s cost of funds will be eliminated from retained earnings.

Original Apartment Magazine Sale

On September 29, 2006, CNP sold the Original Apartment Magazine for $14.0 million. The sale resulted in an immaterial loss.

Acquisition (Santa Cruz)

On February 2, 2007, CNP acquired the Santa Cruz Sentinel, published in Santa Cruz, California, for approximately $45.0 million, plus an adjustment for working capital. Contributions from the partners in CNP (including us) were used to fund the acquisition. Our portion of the acquisition (including working capital) was approximately $25.0 million and was funded with borrowings under our bank credit facility. Santa Cruz is being clustered into our operations in San Jose, California.

Management Agreement (Danbury)

On March 30, 2007, we entered into an agreement with Hearst regarding the management of The News-Times (Danbury, Connecticut), which was purchased by Hearst on March 30, 2007 for $80.0 million, plus an adjustment for working capital. Under the agreement, we have agreed to manage and we control the operations of both the Connecticut Post (owned by us) and The News-Times and are entitled to 73% of the combined profits and losses generated by the two newspapers; however, we and Hearst retain ownership of the assets and liabilities of the Connecticut Post and The News-Times, respectively. As a result of entering into the management agreement, we began consolidating the results of The News-Times and recording minority interest for Hearst’s 27% interest beginning March 30, 2007. Also, in connection with entering into the management agreement, we recorded a pre-tax non-monetary gain of approximately $27.0 million.

Sale of Buildings

In July 2006 and June 2007, we sold our office buildings in Long Beach and Woodland Hills, California for approximately $49.0 million. We recognized a pre-tax gain of approximately $37.4 million on the sales of the buildings. We are leasing back the Woodland Hills office building for one year to give us time to relocate to a smaller office facility.

Debt

On August 2, 2006, we amended our December 30, 2003 bank credit facility (the “Credit Facility”). The amendment maintained the $350.0 million revolving credit facility, the $100.0 million term loan “A” and a $147.3 million term loan “B,”

and provided for a $350.0 million term loan “C” facility. The August 2, 2006 amendment authorized us to purchase the Contra Costa Times, San Jose Mercury News, The Monterey County Herald and the St. Paul Pioneer Press. The $350.0 million term loan “C” facility was funded on August 2, 2006 and used, along with borrowings under our revolver, to pay our portion of the purchase price of the Contra Costa Times and the San Jose Mercury News.

On September 17, 2007, we further amended the Credit Facility. This amendment changed several provisions, including, effective June 30, 2007, increasing the consolidated total leverage ratio and the ratio of consolidated senior debt to consolidated operating cash flow for the remaining life of the Credit Facility; decreasing the ratio of consolidated operating cash flow to consolidated fixed charges for the quarters ending September 30 and December 31, 2007; and in conjunction with the amendment, we voluntarily reduced the commitments under the revolver from $350.0 million to $235.0 million effective October 1, 2007. As a result of the amendment, interest rate margins will increase by 50 basis points for all loan tranches under the bank agreement. Certain other definitional and minor structural changes were also made to the Credit Facility. An amendment fee of 0.25% was paid to all consenting lenders upon closing of the amendment.

Operating Strengths and Strategies

Our long-term operating strategy is to increase revenues and operating profit through realization of synergies from recently completed acquisitions and partnerships and internal growth. Our internal growth strategy is built around three separate revenue drivers: the core newspaper, niche publications and our Internet Web sites. Within our core newspaper, we seek to grow revenue by increasing sales pressure in the market and by offering creative solutions to our advertisers (multi-platform packages, zoning, etc). In addition, we are focused on restructuring and streamlining operations Company-wide to improve operating margins. Our niche publications seek to grow revenue through new product launches and expansion of existing publications, and will pursue national revenue opportunities as our footprint of common publications expands, potentially beyond our newspaper markets. We seek to grow revenue on the Internet by increasing traffic, leveraging print advertising, expanding our existing inventory by building new local Web sites which will be built around a new strategy we call “marketplace,” and through new revenue opportunities derived from our Yahoo! partnership.

Geographic Clusters and Partnerships. One of our key growth strategies is to acquire (or partner with) newspapers in markets contiguous to our own. We refer to this strategy, which we pioneered, as “clustering.” Clustering enables us to realize operating efficiencies and economic synergies, such as the sharing of management, accounting, newsgathering, advertising and production facilities. Clustering also enables us to maximize revenues by selling advertising into newspapers owned by us in contiguous markets. We believe that this strategy allows us to achieve higher operating margins at our clustered newspapers than we would realize from those newspapers on a stand-alone basis. The fiscal year 2007 acquisitions of the San Jose Mercury News, Contra Costa Times, Santa Cruz Sentinel and Torrance Daily Breeze are a continuation of this strategy. The California Newspapers Partnership (“CNP”), the Texas-New Mexico Newspapers Partnership, Prairie Mountain Publishing Company, and the management agreement in Connecticut are also all extensions of this strategy.

New Revenue Streams. We focus on developing and implementing new revenue initiatives and exporting these initiatives across all of our newspapers. We have focused these efforts on our three key revenue drivers which are the core newspaper publications, niche publications/targeted products and our Web sites. We are sharing best practices in advertising products and programs for the core newspaper product across the Company, as well as integrating our core newspaper content with the Internet. More of our Internet strategy is discussed later. We are also focused on implementing niche/targeted (audience-specific) products, both in print and on the Internet. Targeted publications capitalize on segments of high growth and reach advertisers that have not typically run advertisements in our core newspaper publications. To this end, we have launched many publications which can be leveraged in multiple markets, including: a woman’s magazine (SMART), a parenting catalogue (Today’s Mama), a real estate magazine (ReConnection), a citizen journalism print/online tabloid (YourHub.com), a coupon book (Hometown Values) and an Hispanic newspaper (Fronteras). The largest single initiative was the export of SPACES magazine, a glossy, book-like, high-end home magazine, to 13 of our markets, creating a large footprint nationally, including a national Web site www.SPACESmagazine.com. We have also partnered with Publication Services of America, a niche magazine company, to launch 22 magazines in 14 markets covering home design and remodeling, health and fitness, and wedding categories.

Local News Leadership. We believe that we have the largest local newsgathering resources in our markets, and we are committed to being the leading provider of trusted, high quality local news in those markets in both print and on the Internet. Each newspaper/Web site is locally managed and sets its own news coverage and editorial policy based on the local market. Our focus on in-depth local news coverage sets us apart from other news sources in our markets, contributing to reader

loyalty and increasing franchise value. With the timeliness and availability of national and world news 24 hours a day on television and the Internet, we believe that providing in-depth local news coverage is invaluable and is what sets us apart from other news sources. To foster reader interaction and participation, we introduced “citizen journalism” with YourHub.com in Denver whereby local news content and photos are submitted directly by readers. Certain of our Web sites also include sections where readers can comment about online articles or publish “blogs.” In Denver as elsewhere, we have also introduced Podcasts in which top local headlines, presented in an audio version, can be downloaded from the newspapers’ Web sites onto a digital audio device, such as an iPod, and listened to on-the-go. Our ongoing involvement in the communities in which we operate not only strengthens our relationships with these communities, but also provides our advertisers a superior vehicle for promoting their products or services. Although our focus is primarily on local news, we are committed to providing quality national and international news coverage when it is of particular interest to the local community.

Our newspapers and Internet sites are designed to visually attract readers through attractive layouts and color enhancements and have received numerous awards from state press associations as well as other peer organizations for their editorial content, local news and sports coverage, photography and design. The majority of our newspapers receive awards annually for excellence in various editorial categories in their respective regions and circulation size.

Circulation Growth. We believe growth in individually paid circulation is important to maintaining and growing the long-term franchise value of our newspapers. Accordingly, we have and will continue to make significant investments in circulation promotion, telemarketing and other circulation growth campaigns to increase circulation and readership. Our circulation growth strategies are focused on growing home delivery and single copy sales, the most desired circulation types for our advertisers. We also design our management incentive programs to reward our publishers for circulation growth at their daily newspapers. We expect to grow home delivery and single copy circulation in several individual markets. While growing circulation volumes is important, we continue to balance this with an eye on circulation profit by instituting programs that target the replacement of higher churn short-term circulation orders with longer term circulation orders, thereby delivering a stable subscriber base for our advertising customers and controlling subscriber acquisition costs. In the past, this strategy has improved circulation profits, but in some cases decreased circulation home delivery volumes in the short-term. We continue to invest in technology to enhance demographic targeting of existing and potential subscribers aimed at acquiring and retaining what our advertisers consider to be high quality subscribers. We also offer electronic replica editions to subscribers at several of our newspapers. This meets the needs of customers who prefer an electronic edition and also saves the cost of printing and delivering those newspapers.

Cost Controls. We focus on cost control with particular attention on managing staffing requirements through consolidation of production and back office facilities and functions. At newspapers with collective bargaining agreements, management strives to enter into long-term agreements with small annual increases. In addition, we further control labor costs through investments in state-of-the-art production equipment that improves production quality and increases operating efficiency. Our investments, such as new production and office facilities in Salt Lake City and in Denver, not only will reduce costs through lower staffing requirements and newsprint consumption as a result of reduced waste, the implementation of 48” web width and shorter cut-off on the new presses, but they will also make significant improvements to the reproduction and color quality and capacity of the newspapers. The Salt Lake City facility became operational in the spring of 2006; the production facility in Denver is expected to be fully operational in the fourth calendar quarter of 2007.

We are also focused on newsprint cost control at our existing facilities. We are reducing the web width to 46” from 50” or 48” on the majority of our presses in fiscal year 2008 resulting in permanent newsprint volume savings. In addition to volume savings, each of our newspapers benefits from the discounted newsprint pricing we obtain as one of the largest newspaper groups in the United States. We purchase newsprint from several suppliers under pricing arrangements we believe are some of the most favorable in the industry.

In the fourth quarter of fiscal 2007, we implemented an Operations Task Force with a mission to identify additional cost-savings in the areas of production, circulation, healthcare, technology and the expansion of our finance shared services operation. As a result of this process, we have identified and have begun implementing significant cost-saving programs at our newspapers and we expect to continue and expand the cost savings associated with this program in the future.

Internet. MediaNews Group interactive (“MNGi”), our Internet subsidiary, drives the interactive media business of our Company and manages the centralized technology infrastructure that supports each of our local sites. Our strategy is to use

the Internet and other electronic media to enhance and broaden our position as the leading provider of news, information and services in our local media markets. Our interactive operations are growing market share and extending the profitability of our local media franchises by leveraging our extensive newsgathering resources, print and online sales infrastructures and partnering with providers of emerging technologies and industry leaders, including Internet portals, broadband, Internet video and wireless, expanding our ability to provide both news and advertising across a broad platform of digital media devices. We recently expanded our offerings in the rapidly growing online video marketplace, including the integration of video into our online recruitment, auto and real estate packages. We also began providing online video news stories to complement the print and online versions of our newspapers. We expect to extend the reach of our brands beyond our core and existing print audience to attract a younger and more diverse audience. Finally, we are cultivating relationships with new and existing advertisers and readers by proactively addressing their needs by providing multimedia packages and 24/7 news operations geared toward breaking news online first and providing new video content to enhance the online experience.

In fiscal year 2007, we expanded our partnership with Yahoo! and a broad consortium of other newspaper companies, including Hearst, Belo, Lee, McClatchy and others. This partnership extended the relationship already in progress with Yahoo! Hot Jobs. The Newspaper Consortium (NPC), representing over 300 newspapers, and Yahoo! reached agreement on deal terms in three critical areas.

	•		Ad Serving Technology and Network: MNGi and other NPC sites will move all ad serving business to the Yahoo! ad network platform. Local newspaper sites and Yahoo! will have the opportunity to cross-sell each other’s ad inventory.

	•		Search: MNGi and other NPC sites will integrate Yahoo! Web Search, Sponsored Search, Content Match and Yahoo! Toolbar into each newspaper’s Web site.

	•		Content Integration: MNGi and other NPC sites will be treated as a “trusted source” in Yahoo! News Search resulting in increased traffic to our sites. Local news content modules will appear on critical section fronts of Yahoo! including the Front Page, Yahoo! Mail, Finance, Sports, etc.

Central to this partnership is a focus from our sales teams to sell targeted online-only advertising, taking full advantage of the Yahoo! partnership and the new revenue streams it affords the Company.

Additionally, to expand our direct sales channels, we are adding functionality and several comprehensive online self-service products to facilitate customer orders. The development of this online marketplace will allow us to better compete with new entrants into online advertising and enhance advertiser satisfaction. These combined efforts give us the ability to integrate our online/offline databases to allow for a higher degree of online targeted marketing, including print subscription acquisitions, email marketing and the ability to target advertising based on the captured demographic and psychographic data.

Our search strategy enables us to improve our understanding of the intent of our users and thus better deliver relevant content. In conjunction with major site redesigns and vastly improved interactive content, we plan to meet the changing content demands of our online users and grow our overall audience.

We are innovating and expanding our core newspaper Web sites and building or expanding new sites such as LA.com, BayArea.com and InsideDenver.com as local hubs. These sites will be built around our new “marketplace” strategy which centers on building audiences around certain key categories, such as activities, special interests, etc. and leveraging the interactivity of the Web with user-generated content, customer feedback, and self-generated advertisings.

We are currently exploring several strategic investments and partnerships with companies that have built technology that is key to our marketplace and we believe such relationships will facilitate and accelerate the successful implementation of many of our Internet strategies.

By being the leading provider of local news and information in our markets and leveraging the Internet, electronic media, emerging wireless and expanding broadband technologies, we believe that our newspapers are well positioned to respond to and benefit from changes in the way advertising, news and information are delivered to customers in our markets now and in the future. Links to our online newspapers can be found at www.medianewsgroup.com.

Superior Management. Our management team has a proven track record of successfully acquiring, including through partnerships, over 80 newspapers that have been successfully integrated into our operations. All of our senior executives have spent the majority of their careers in the newspaper industry operating, acquiring and integrating newspapers.

Advertising and Circulation Revenues

Advertising is the largest component of a newspaper’s revenues, followed by circulation revenue. Advertising rates at each newspaper are established based upon market size, circulation, readership, demographic makeup of the market and the availability of alternative advertising media in the marketplace. While circulation revenue is not as significant as advertising revenue, circulation volume trends can impact the decisions of advertisers and advertising rates.

Advertising revenue includes Retail (local and national department stores, specialty shops, preprinted advertising circulars and other local retailers, direct mail and niche publications), National (national brand advertising accounts), Classified (employment, automotive, real estate and private party) and Interactive (online component of Classified Advertising, search revenue and banner revenue). Other revenue consists primarily of revenue from commercial printing and niche/targeted publications. The contributions of Retail, National, Classified, Interactive, Circulation and Other revenue to total revenues are shown in the following table.


	Fiscal Years Ended
	June 30,⁽¹⁾
	2007			2006			2005
Retail		42	%		42	%		42	%
National		7			6			6
Classified		25			27			26
Interactive		6			5			4
Circulation		16			16			17
Other		4			4			5

		100	%		100	%		100	%


(1)		Generally accepted accounting principles do not allow us to consolidate the revenues for our JOA investments we do not control; accordingly, we record our share of the JOAs’ (Salt Lake City and Denver) net results in one line item, “Income from Unconsolidated JOAs.” The revenue data for the JOAs we do not control (Salt Lake City, Denver, Charleston and Detroit) are excluded from this summary (see further discussion under Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies).

Newsprint

Newsprint is one of the largest costs of producing a newspaper. We buy newsprint from several suppliers under arrangements that we believe provide us with some of the most favorable newsprint prices in the industry. Newsprint prices began increasing during fiscal year 2003 and this trend continued through the third quarter of fiscal year 2007. However, beginning in our fourth quarter, 2007, market supply versus demand put downward pressure on newsprint prices. To reduce the impact from the trend of rising prices we were experiencing, starting in fiscal year 2006, we began implementing cost-cutting measures such as decreasing our newspapers to 48” web width and using lighter weight newsprint. The downward trend of newsprint prices, coupled with the impact of our cost-cutting measures should result in significantly lower newsprint expenses in fiscal year 2008. During fiscal year 2007, excluding our unconsolidated JOA operations, we consumed approximately 235,000 metric tons of newsprint compared to 146,000 during 2006 and 2005. During fiscal years 2007, 2006 and 2005, we incurred newsprint expense of $139.9 million, $83.6 million and $77.4 million, respectively. The increase from fiscal year 2006 to fiscal year 2007 was due to our fiscal year 2007 acquisitions. Newsprint expense as a percentage of revenue from our newspaper operations (excluding unconsolidated JOAs) for fiscal years 2007, 2006 and 2005, was 11.1%, 10.1% and 9.9%, respectively. Our average price per metric ton was $596 during fiscal year 2007, compared to $574 and $528 during fiscal years 2006 and 2005, respectively. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Near Term Outlook — Newsprint Prices” for a discussion regarding current newsprint pricing trends.

Employee Relations

As of June 30, 2007, we employed at our consolidated entities and unconsolidated JOAs in Denver and Salt Lake City approximately 10,500 full-time and 2,200 part-time employees, of which approximately 4,000 are unionized (approximately 1,500 of the total union employees are in Denver). There has never been a significant strike or work stoppage at any of our newspapers during our ownership, and we believe that our relations with our employees are generally good. We are currently involved in a number of contract negotiations with the various unions that represent our employees. We have 41 union contracts at our consolidated entities and unconsolidated JOAs, of which 19 are due for negotiation in the next twelve months and 10 are expired. While we expect the negotiations on our open contracts will be concluded in the near future, we have not signed any of the open contracts.

Seasonality and Cyclicality

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 generally our strongest revenue quarter of the year. Due to generally poor weather and a lack of holidays, the first calendar quarter, or our third fiscal quarter, is generally our weakest revenue quarter of the year.

Our advertising revenues, as well as those of the newspaper industry in general, are cyclical and dependent upon general economic conditions, as well as industry trends such as real estate and automotive. Historically, advertising revenues have increased in periods of economic growth and declined with general national, regional and local economic downturns and recessionary economic conditions.

Competition

Each of our newspapers competes for advertising revenue to varying degrees with magazines, yellow pages, radio, broadcast television and cable television, as well as with some weekly publications, direct mail and other advertising media, including electronic media (Internet). Competition for newspaper advertising is largely based upon circulation, price and the content of the newspaper. Our suburban and small city daily newspapers are the dominant local news and information source, with strong brand name recognition and no direct competition from similar daily newspapers published in their markets. However, in most suburban small city daily newspapers, some circulation competition exists from larger daily newspapers, which are usually published in nearby metropolitan areas.

We believe larger metropolitan daily newspapers with circulation in our suburban newspaper markets generally do not compete in any meaningful way for local advertising revenues, a newspaper’s main source of revenues. However, we do compete to some extent with the larger metropolitan newspapers in Los Angeles, San Francisco and Boston for readers and, to a lesser extent, advertising in certain categories. In general, our suburban daily newspapers capture the largest share of local advertising as a result of their in-depth coverage of their market, providing readers with local stories and information that major metropolitan newspapers are unable or unwilling to provide. We also believe advertisers generally regard newspaper advertising as one of the most effective methods of advertising promotions and pricing as compared to other advertising mediums.

Most newspapers are publishing news and advertising content on the Internet. In addition, there are many news and search sites on the Internet, which are advertising and/or subscription supported. Many of these sites target specific types of advertising such as employment, real estate and automotive classified. Accordingly, we have and will continue to develop partnerships and invest in our online growth strategies, which we believe allows us to capture our share of the locally available advertising dollars being spent on the Internet now and in the future.

Regulation and Environmental Matters

Substantially all of our facilities are subject to federal, state and local laws concerning, among other things, emissions to the air, water discharges, handling and disposal of waste and remediation of contaminated sites. Compliance with these laws has not had, nor do we expect it to have, a material effect upon our capital expenditures, net income or competitive position. Although we believe we are in material compliance with these requirements, we may not have been and may not at all times

be in complete compliance with all applicable requirements, and there can be no guarantee that we will not incur material costs, including fines or damages, resulting from non-compliance.

Environmental laws and regulations and their interpretation have changed rapidly in recent years and may continue to do so in the future. These may include obligations to investigate and clean up environmental contamination on or from properties we currently own or formerly owned or operated, or at off-site locations where we are identified as a responsible party. Certain laws impose strict and, under certain circumstances, joint and several liability for investigation and clean-up costs. Environmental Assessment Reports of our properties have identified historic activities and conditions on certain of these properties, as well as current and historic uses of properties in surrounding areas, which may require further study or remedial measures. No material remedial measures are currently anticipated or planned by us with respect to our properties. However, no assurance can be given that existing Environmental Assessment Reports reveal all environmental liabilities, that any prior owner of our properties did not create an environmental condition not known to us, or that an environmental condition does not otherwise exist at any such property which could result in incurrence of material cost.

Because we deliver certain newspapers by second-class mail, we are required to obtain permits from, and to file an annual statement of ownership with, the United States Postal Service.

Item 1A. Risk Factors

Advertising Revenues — We depend on advertising revenues that are affected by a number of factors, many of which are beyond our control.

The primary source of our revenue is advertising. Our advertising revenues are affected by:

	•		the health of the economy in the areas where our newspapers are distributed and in the nation as a whole,

	•		the circulation of our newspapers,

	•		consolidation of retail advertisers within our markets,

	•		quality of our editorial content,

	•		the demographic makeup of the population where our newspapers are distributed,

	•		fluctuations in our competitors’ price of advertising, and

	•		the activities of our competitors, including increased competition from other advertising mediums, including network television, cable and satellite television, the Internet, radio, weekly newspapers and local magazines.

Paid Circulation

The newspaper publishing industry continues to experience some circulation decline with several factors contributing: (a) Do-not-call lists which limit the use of telemarketing to acquire new home delivery subscription sales; (b) the increased scrutiny of, and reductions in, bulk/third-party sales; (c) rule changes by the Audit Bureau of Circulation; and (d) the Internet, which creates competition for readers’ time and does not count as paid circulation even if the reader is viewing our newspapers’ Web sites. We have taken steps to meet each of these challenges, including strengthening practices aimed at compliance with industry-wide accepted procedures in circulation reporting and moving from the paid circulation measurement to a readership model to more accurately measure the utilization of our products. Nonetheless, an ongoing decline in paid circulation could have a material effect on the rate and volume of circulation and advertising revenue our newspapers receive.

Newsprint Costs – Increases in newsprint costs could adversely affect our financial results.

Newsprint is a basic commodity and its price is sensitive to the worldwide balance of supply and demand. However, the demand for newsprint can change quickly, resulting in wide swings in its price. Increases in newsprint prices can adversely impact our financial results to the extent such increases are not offset by increased advertising revenues. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Near Term Outlook — Newsprint Prices.”

Competition – Competition could have a material adverse effect on us.

Our revenue depends primarily upon the sale of advertising and, to a lesser degree, paid circulation. Our competitors for advertising and circulation include local and regional newspapers, magazines, yellow pages, radio and broadcast television, cable television, direct mail, electronic media (including the Internet) and other communications and advertising media which operate in our markets. Some of our competitors are larger and have greater financial resources than we do. The extent and nature of our competition in any particular newspaper market is in large part determined by the location and demographics of the market and the number of media alternatives in that market. Competition for newspaper advertising is largely based upon circulation, price and the content of the newspaper.

Full Implementation of Operating Strategy and Asset Recoverability – Failure to implement our operating strategy could have a material adverse effect on us.

Our future financial performance and our ability to recover the cost of our investments are dependent in large part upon our ability to successfully implement our business strategies. We cannot assure you that we will be able to successfully implement every one of our business strategies or be able to improve our operating results. In particular, we cannot assure you that we will be able to fully implement all of our cost-savings strategies, maintain paid circulation volumes at our publications, obtain new sources of advertising revenues from our Web sites and niche publications, generate additional revenues by building on the brand names of our publications or raise the cover or subscription prices of our publications without causing a decline in circulation. Accordingly, the EBITDA performance that we experienced in fiscal year 2007 and our forecasted results for fiscal year 2008 (including adjustments for expected full year cost savings) that we used to evaluate and support the recoverability of our investments could deteriorate. Another significant factor in determining the recoverability of our investments is the market-based multiples of EBITDA, which if it declines from those we are currently using, would also affect our analysis of recoverability of our investments.

Senior Management

Our ability to maintain our competitive position is dependent on the services of our senior management team. If we were unable to retain the existing senior management personnel, develop future senior management within our company and/or attract other qualified senior management personnel, our business would be adversely affected.

Employee Benefits

Health insurance costs have increased significantly faster than inflation on an annual basis over the past few years. We also anticipate that in the future, the cost of health care will continue to escalate, causing an increase to our expenses and employee contributions. If we are unable to control our health insurance costs as part of our strategic plans, it could adversely affect our results.

Self-Insurance and Deductibles on Workers’ Compensation Insurance

Under our workers’ compensation insurance program, we are responsible for the first $500,000 per occurrence; otherwise we have statutory unlimited insurance coverage for workers’ compensation losses. The final cost of many of these claims may not be known for several years. We continuously review the adequacy of our insurance coverage, which we currently believe to be appropriate in light of the cost of insurance coverage and the type of risk being insured.

The workers’ compensation insurance and self-insurance liability does not include coverage of our independent contractors. We believe these claims are covered under our general liability insurance (discussed below). However, if it is later determined that the independent contractors are covered under workers’ compensation insurance, our loss exposure (and liability) could be significantly greater than we have currently estimated.

Other Insurance Exposure, including Earthquake Coinsurance and Deductibles and Caps on General Liability, Property and Other Insurance Lines

Our general liability, property and other insurance lines have deductibles ranging from $100,000 to $500,000. We also have specific earthquake coverage which has a deductible of the lesser of $250,000 per incident, or 5% of the value of the

insured property. The maximum insured loss under the earthquake coverage is $25.0 million for the properties acquired in August 2006 and $70.0 million for all other locations.

We are effectively controlled by two shareholder groups.

William Dean Singleton, the Scudder family, and their respective family trusts, have the power to vote approximately 93% of our outstanding common stock. These shareholder groups are entitled to elect all of the members of our Board of Directors, and to otherwise control us, including decisions with respect to partnerships, mergers, liquidations and asset acquisitions and dispositions. There are no independent directors on our Board.

We are not required to and may not comply with certain Board of Directors and Audit Committee requirements of the Sarbanes-Oxley Act of 2002.

Our Board of Directors currently consists of four members: two members of the Scudder family, William Dean Singleton, our Chief Executive Officer, and Howell E. Begle, Jr., Of Counsel to Hughes Hubbard & Reed, LLP, which law firm is our counsel. The Board does not have a separate audit committee. No member of the Board has been elected, or is anticipated to be elected, to represent the interests of our creditors. However, we are considering expanding the Board and possibly adding an independent director in the future, although there is no assurance such action will be taken.

Our business could suffer if we are unsuccessful in negotiating new collective bargaining agreements.

Portions of our workforce (and portions of the workforces at our JOAs) are represented by labor unions. The collective bargaining agreements covering these employees expire periodically. We have 41 union contracts of which 19 are due for negotiation in the next twelve months and 10 are expired. We or our JOAs, as applicable, and the employees that were covered by the expired agreements are currently continuing to operate under the terms of the expired agreements. While we believe that we and our partners currently have satisfactory relationships with labor unions and our employees who are represented by labor unions, no assurance can be given that we or our partners will be successful in any future negotiations with these unions in arriving at new collective bargaining agreements on terms that are acceptable to us and the employees. Any union strikes, threats of strikes or other resistance in connection with the negotiation of a new agreement could materially adversely affect our business and our ability to implement our operating strategies. A lengthy strike at a significant newspaper location would have a materially adverse effect on our operations and financial condition.

Substantial Leverage – Our substantial indebtedness could have a material adverse effect on our financial health and prevent us from fulfilling our obligations.

We have a significant amount of indebtedness. Subject to the restrictions contained in our indebtedness agreements, we may incur additional indebtedness from time to time to finance acquisitions, make capital expenditures, fund working capital and for general business purposes.

Our substantial indebtedness could have important consequences. For example, it could:

	•		require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, investments and other general corporate purposes,

	•		impair our ability to obtain additional financing for, among other things, working capital, capital expenditures, acquisitions or other general corporate purposes, or

	•		limit our flexibility to adjust to changing business and market conditions, and make us more vulnerable to a downturn in general economic conditions as compared to our competitors that have a lower ratio of debt to cash flow.

In addition, our failure to comply with the financial and other restrictive covenants contained in our indebtedness agreements could result in an event of default under such indebtedness, which, if not cured or waived, could have a material adverse effect on us. If we cannot meet or refinance our obligations when they are due, we may have to sell assets, reduce capital expenditures or take other actions, which could have a material adverse effect on us.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our credit facility or otherwise in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. In addition, we may need to refinance all or a portion of our indebtedness, on or before maturity.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2: Properties

Our corporate headquarters are located in Denver, Colorado. The listing below of our production and operating facilities are, in most cases, complete newspaper production and office facilities, but the listing also includes television and radio stations. The principal production and operating facilities we own are located in:


Alaska	Minnesota	Texas	California

Anchorage	St. Paul ^(a)	El Paso	Vacaville	San Jose

		Graham	Paradise	Walnut Creek

Colorado	New Mexico		Hayward	Concord

Denver	Las Cruces	Utah	Pleasanton	Richmond

	Carlsbad	Salt Lake City	Marin	Monterey ^(a)

Connecticut	Farmington	Murray	Eureka	West Covina

Bridgeport	Alamogordo		Chico	Valencia

Danbury ^(a)		Vermont	Vallejo	San Bernardino

	Pennsylvania	Brattleboro	Lakeport	Ontario

Massachusetts	York	Bennington	Woodland

Pittsfield	Hanover		Ukiah

North Adams	Lebanon

Lowell	Chambersburg

Fitchburg

Devens

(a) We manage this newspaper for The Hearst Corporation.

Certain facilities located in Denver and Colorado Springs, Colorado and Long Beach, Torrance^(a), Pasadena, San Ramon, Hayward and Pleasanton, California are operated under long-term leases.

We believe that all of our properties are generally well maintained, in good condition and suitable for current operations. Our equipment is adequately insured.

Item 3: Legal Proceedings

See Note 11: Commitments and Contingencies of the consolidated financial statements.

Item 4: Submission of Matters to a Vote of Security Holders

None.

Item 6: Selected Financial Data

The table below presents selected historical consolidated financial data.

The following data should be read in conjunction with “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.


	MediaNews Group, Inc. & Subsidiaries

	Fiscal Years Ended June 30,
	2007			2006			2005			2004			2003
	(Dollars in thousands)
INCOME STATEMENT DATA(a):
Revenues
Advertising	$	1,063,681		$	660,389		$	610,060		$	582,689		$	570,163
Circulation		210,702			130,829			129,344			132,505			137,445
Other		55,457			44,658			39,875			38,635			30,990

Total Revenues		1,329,840			835,876			779,279			753,829			738,598

Income (Loss) from Unconsolidated JOAs		(10,418	)		(23,298	)		23,291			22,207			25,227

Cost of Sales		421,343			260,939			242,653			234,784			221,888
Selling, General and Administrative		687,875			417,602			382,180			366,636			346,763
Depreciation and Amortization		68,670			44,067			40,598			40,742			40,553
Interest Expense		82,388			55,564			49,481			57,036			64,252
Gain on Sale of Assets and Newspaper Properties		66,156			1,129			114			6,982			28,797
Minority Interest		(59,557	)		(35,033	)		(29,334	)		(32,237	)		(34,088	)
Income Before Income Taxes		53,788			4,960			59,970			43,703			69,253
Net Income		35,642			1,077			39,880			26,737			38,312
Net Income Applicable to Common Stock		19,731			—			—			—			—

CASH FLOW DATA:
Capital Expenditures	$	31,636		$	47,501		$	51,312		$	36,483		$	20,669
Cash Flows from:
Operating Activities^(b)		144,864			77,257			92,944			80,174			89,759
Investing Activities (including Capital Expenditures)		(361,473	)		(64,454	)		(92,669	)		(20,534	)		(32,480	)
Financing Activities^(b)		225,270			(16,641	)		(60,749	)		1,753			(55,965	)

BALANCE SHEET DATA:
Total Assets	$	2,595,309		$	1,439,566		$	1,365,772		$	1,383,149		$	1,348,038
Long-Term Debt and Capital Leases		1,124,633			867,893			877,569			928,467			904,554
Other Long-Term Liabilities and Obligations and Defined Benefit and Other Post Employment Benefit Plan Liabilities		58,851			40,557			47,359			40,429			58,837
Putable Common Stock		33,165			40,899			48,556			—			—
Total Shareholders’ Equity		91,164			59,520			38,493			61,006			34,894

NON-GAAP FINANCIAL DATA ^(c):
Adjusted EBITDA	$	220,622		$	157,335		$	154,446		$	152,409		$	169,947
Minority Interest in Adjusted EBITDA		(80,004	)		(46,541	)		(41,152	)		(45,747	)		(49,089	)
Combined Adjusted EBITDA of Unconsolidated JOAs		26,509			27,909			38,097			39,842			40,371
EBITDA of Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company^(d)		1,891			5,681			9,610			10,108			3,275

Adjusted EBITDA Available to Company	$	169,018		$	144,384		$	161,001		$	156,612		$	164,504

Footnotes on following pages.

Footnotes from previous page.

(a)

Significant Transactions. The income statement data is impacted by the following significant transactions.


Acquisitions Fiscal Years 2003-2007
Year	Date	Publication	Location	Description	Purchase Price
2007	08/02/06	San Jose Mercury News	San Jose, CA	Daily morning newspapers	$736.8 million
		Contra Costa Times	Walnut Creek, CA

	02/02/07	Santa Cruz Sentinel	Santa Cruz, CA	Daily morning newspaper	$45.0 million

		See Other Transactions (below) regarding the Daily Breeze (Torrance), The Monterey County Herald, St. Paul Pioneer Press and The News-Times (Danbury)

2006	08/03/05	Detroit News	Detroit, Michigan	Daily morning newspaper (editorial only) and limited Detroit JOA partnership interest	$25.0 million

		See Other Transactions (below) regarding the Prairie Mountain Publishing Company formation and Texas-New Mexico Newspapers Partnership restructuring

2005	01/04/05	The Park Record	Park City, Utah	Three times weekly newspaper	$8.0 million

2004	01/05/04	Grunion Gazette and Downtown Gazette	Long Beach, California	Weekly newspapers	$9.0 million

		See Other Transactions regarding the York JOA restructuring

2003	01/31/03	Paradise Post	Paradise, California	Three times weekly newspaper, plus commercial printing	$13.0 million

	10/01/02	The Reporter	Vacaville, California	Daily morning newspaper	$30.9 million

	10/01/02	Original Apartment Magazine	Los Angeles, California	Free distribution apartment rental magazine	$10.0 million, plus $4.9 million in earnouts


Dispositions Fiscal Years 2003-2007
Year

2007		On September 29, 2006, we sold, through the California Newspapers Partnership, the Original Apartment Magazine for $14.0 million. See Other Transactions regarding the Management Agreement in Connecticut.
2006		No dispositions. See Other Transactions regarding the Prairie Mountain Publishing Company formation and Texas-New Mexico Newspapers Partnership restructuring.
2005		No dispositions.
2004		No significant dispositions. See Other Transactions regarding the Charleston JOA restructuring.
2003		No dispositions. See Other Transactions regarding the formation of Texas-New Mexico Newspapers Partnership.


Other Transactions Fiscal Years 2003-2007
Year		Description
2007		Effective December 15, 2006, The Hearst Corporation (“Hearst”) acquired the Daily Breeze, a daily morning newspaper and three weekly newspapers in Torrance, California for approximately $25.9 million.

		Effective August 2, 2006, Hearst acquired The Monterey County Herald and St. Paul Pioneer Press (both daily morning newspapers) and related publications and Web sites for $263.2 million.

		Pursuant to an agreement between us and Hearst, Hearst agreed to make an equity investment in us and we have agreed to purchase from Hearst the publications with a portion of the Hearst equity investment in us. The equity investment by Hearst in us is subject to antitrust review by the Antitrust Division of the Department of Justice. Also under the agreement with Hearst, during the period the publications are owned by Hearst, the publications are managed by us. Because we have all the risks and rewards associated with ownership of the Daily Breeze, The Monterey County Herald and St. Paul Pioneer Press and retain all of the cash flows generated by these newspapers as a management fee, we began consolidating the publications as of the effective date of such newspapers’ acquisition by Hearst.

		Also, pursuant to the agreement between us and Hearst, we agreed that at the election of us or Hearst, we will purchase the publications from Hearst (plus Hearst’s costs and costs of funds in respect of its purchase of such newspapers) if for any reason Hearst’s equity investment in us is not consummated.

		On March 30, 2007, we entered into an agreement with Hearst regarding the management of The News-Times (Danbury, Connecticut) which was purchased by Hearst on March 30, 2007 for $80.0 million. Under the agreement, we control the management of both the Connecticut Post (owned by us) and The News-Times and are entitled to 73% of the combined profits and losses of the two newspapers; however, we and Hearst retain ownership of the assets and liabilities of the Connecticut Post and The News-Times, respectively. Profits and losses refer to net income, adjusted so that each partner retains 100% of the periodic depreciation and amortization recorded relating to its contributed assets. The partners also retain 100% of any related gain or loss taken related to the disposition of its contributed assets. As a result of entering into the management agreement, we began consolidating the results of The News-Times and recording minority interest for Hearst’s 27% interest beginning March 30, 2007.

Footnotes continue on following page.

Footnotes from previous page (continued).


2006		Effective February 1, 2006, we formed the Prairie Mountain Publishing Company (“PMP”) with E.W. Scripps (“Scripps”). Upon formation of PMP, we contributed substantially all of the operating assets of Eastern Colorado Publishing Company, comprised of several small daily and weekly newspapers, and Scripps contributed substantially all of the operating assets of the Daily Camera and the Colorado Daily, both published in Boulder, Colorado. In addition to the assets contributed to PMP, we paid Scripps $20.4 million to obtain our 50% interest in PMP. Effective December 26, 2005, we contributed the assets of our four daily newspapers published in southern Pennsylvania (The Evening Sun (Hanover), the Lebanon Daily News and our interest in the entity that publishes the York Daily Record and York Sunday News, which will continue to be published under the terms of a JOA agreement along with The York Dispatch) and Gannett contributed assets of the Public Opinion, published in Chambersburg, PA into the Texas-New Mexico Newspapers Partnership. As a result of the contributions (our ownership percentage went from 33.8% to 59.4%) and amended and restated partnership agreement, we are now the controlling partner and accordingly began consolidating the results of the Texas-New Mexico Newspapers Partnership effective December 26, 2005.

2005		In June 2005, we purchased the remaining 20% of The Denver Post Corporation which we did not own for $45.9 million.

2004		In May 2004, we restructured our interest in Charleston Newspapers (“Charleston JOA”). In exchange for $55.0 million (net of certain adjustments) and a limited partnership interest in a newly formed entity, Charleston Newspapers Holdings, L.P., we contributed our general partnership interest in the Charleston JOA and the masthead of the Charleston Daily Mail to Charleston Newspapers Holdings, L.P. Our limited partnership interest does not entitle us to any share of the profits or losses of the limited partnership. We recorded a pre-tax gain of $8.0 million as a result of this transaction.

		Effective April 30, 2004, we restructured our interest in the York JOA through the exercise of our call option to acquire the remaining interest in The York Newspaper Company and the masthead of the York Daily Record for approximately $38.3 million.

2003		Effective March 3, 2003, we formed the Texas-New Mexico Newspapers Partnership with Gannett. We contributed assets of our daily newspapers published in New Mexico (Las Cruces Sun-News, The Daily Times (Farmington), Carlsbad Current-Argus, Alamogordo Daily News and The Deming Headlight) and Gannett contributed the El Paso Times. Upon formation, we recognized in fiscal year 2003 a non-monetary pre-tax gain of $28.8 million and began accounting for our 33.8% interest in the partnership under the equity method of accounting.

(b)		Prior Year Revision/Reclassification. For comparability certain prior year balances have been reclassified to conform to current reporting classifications. In particular, the statements of cash flows have been revised for the years ended June 30, 2006 and 2004 to reflect distributions in excess of net income paid to minority interests in accordance with Statement of Financial Standards (“SFAS”) No. 95, Statement of Cash Flows. For the years ended June 30, 2006 and 2004, the revision increased the reported net cash flows from operating activities and decreased the reported net cash flows from financing activities by $5.7 million and $3.7 million, respectively. There was no impact to the statements of cash flows for the years ended June 30, 2005 and 2003.

(c)		Non-GAAP Financial Data. The Non-GAAP Financial Data presented, including 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 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 Texas-New Mexico Newspapers Partnership (beginning December 26, 2005), The Denver Post Corporation (through June 10, 2005), and The York Newspaper Company (through April 30, 2004), our less than 100% owned subsidiaries, as well as the Connecticut newspapers (beginning March 30, 2007) (“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 from the Texas-New Mexico Newspapers Partnership (through December 25, 2005) and our proportionate share of EBITDA of the Prairie Mountain Publishing Company (beginning February 1, 2006) (see footnote e). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reconciliation of GAAP and Non-GAAP Financial Information.”

(d)		EBITDA of Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company. The Texas-New Mexico Newspapers Partnership and the Prairie Mountain Publishing Company agreements require the partnerships to make distributions equal to the earnings of the partnership before depreciation and amortization (EBITDA). From March 3, 2003 through December 25, 2005, our 33.8% share of the EBITDA of Texas-New Mexico Newspapers Partnership and beginning February 1, 2006, our 50% share of the EBITDA of Prairie Mountain Publishing Company, have been included in Adjusted EBITDA Available to Company as they are an integral part of our cash flow from operations defined by our debt covenants. Beginning December 26, 2005, we became the controlling partner of the Texas-New Mexico Newspapers Partnership at which time we began consolidating its results. See Note 4: Investments in California Newspapers Partnership and Texas-New Mexico Newspapers Partnership and Note 5: Acquisitions, Dispositions and Other Transactions of the notes to the consolidated financial statements of this Annual Report on Form 10-K for further discussion of the Texas-New Mexico Newspapers Partnership restructuring and the Prairie Mountain Publishing Company formation.

Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following analysis of the financial condition and results of operations should be read in conjunction with Item 6: Selected Financial Data and the consolidated financial statements of MediaNews Group, Inc. and the notes thereto appearing elsewhere in this Annual Report on Form 10-K.

Company Overview

We are in the business of publishing daily and weekly newspapers, niche publications, and Internet Web sites related thereto. Our newspapers derive their revenues primarily from advertising and circulation. Our primary operating expenses (before depreciation and amortization) are employee compensation, newsprint, marketing and distribution. In addition to our newspaper and related Internet operations, we own radio stations in Graham and Breckenridge, Texas and a CBS affiliate television station in Anchorage, Alaska. However, for the fiscal year ended June 30, 2007, the combined revenues of these non-newspaper operations were not significant to our operations as they comprised less than 1.0% of our consolidated revenue.

Newspaper revenues 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 generally 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 generally our weakest revenue quarter of the year.

Our advertising revenues, as well as those of the newspaper industry in general, are cyclical and dependent upon general economic conditions. Historically, advertising revenues have increased in periods of economic growth and declined during national, regional and local economic downturns.

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; pension and retiree medical benefits, which require the use of various estimates concerning the work force, interest rates and plan investment return, and involve the use of advice from consulting actuaries; and reserves for the self-insured portion of our workers’ compensation programs, which are based on such factors as claims growth and also involve 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 later in this Annual Report on Form 10-K 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, 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 a home delivery independent contractor. Amounts received in advance of an advertising run date or newspaper delivery are deferred and recorded on the balance sheet as a current liability (“Unearned Income”) and recognized as revenue when earned.

The operating results of our unconsolidated JOAs (Denver, Salt Lake City) 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, 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.

Operating Results

We have provided below certain summary historical consolidated financial data for fiscal years 2007, 2006 and 2005, in each case including the percentage change between periods.


	Summary Historical Financial Data
	Fiscal Years Ended June 30,
										2007 vs.			2006 vs.
	2007			2006			2005			2006			2005
	(Dollars in thousands)
INCOME STATEMENT DATA:
Total Revenues	$	1,329,840		$	835,876		$	779,279			59.1	%		7.3	%

Income (Loss) from Unconsolidated JOAs		(10,418	)		(23,298	)		23,291			(c	)		(c	)

Cost of Sales		421,343			260,939			242,653			61.5			7.5
Selling, General and Administrative		687,875			417,602			382,180			64.7			9.3
Depreciation and Amortization		68,670			44,067			40,598			55.8			8.5
Interest Expense		82,388			55,564			49,481			48.3			12.3
Other (Income) Expense, Net		11,223			1,440			8,669			(c	)		(83.4	)

Total Costs and Expenses		1,271,499			779,612			723,581			63.1			7.7
Equity Investment Income (Loss), Net		(734	)		5,898			10,201			(c	)		(42.2	)
Gain on Sale of Assets and Newspaper Properties		66,156			1,129			114			(c	)		(c	)
Minority Interest		(59,557	)		(35,033	)		(29,334	)		70.0			19.4
Net Income		35,642			1,077			39,880			(c	)		(c	)
Net Income Applicable to Common Stock		19,731			—			—			(c	)		(c	)

CASH FLOW DATA:
Cash Flows from:
Operating Activities	$	144,864		$	77,257		$	92,944
Investing Activities		(361,473	)		(64,454	)		(92,669	)
Financing Activities		225,270			(16,641	)		(60,749	)

NON-GAAP FINANCIAL DATA^(a):
Adjusted EBITDA	$	220,622		$	157,335		$	154,446			40.2	%		1.9	%
Minority Interest in Adjusted EBITDA		(80,004	)		(46,541	)		(41,152	)		71.9			13.1
Combined Adjusted EBITDA of Unconsolidated JOAs		26,509			27,909			38,097			(5.0	)		(26.7	)
EBITDA of Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company^(b)		1,891			5,681			9,610			(66.7	)		(40.9	)

Adjusted EBITDA Available to Company	$	169,018		$	144,384		$	161,001			17.1	%		(10.3	)%


(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 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 Texas-New Mexico Newspapers Partnership (beginning December 26, 2005) and The Denver Post Corporation (through June 10, 2005), our less than 100% owned consolidated subsidiaries as well as the Connecticut newspapers (beginning March 30, 2007) (“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 and Salt Lake City (“Combined Adjusted EBITDA of Unconsolidated JOAs”); and (iii) increasing Adjusted EBITDA by our proportionate share of EBITDA from the Texas-New Mexico Newspapers Partnership (through December 25, 2005) and our proportionate share of EBITDA of the Prairie Mountain Publishing Company (beginning February 1, 2006) (see footnote b). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reconciliation of GAAP and Non-GAAP Financial Information.”
(b)		EBITDA of The Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company. The Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company agreements require the partnership to make distributions equal to the earnings of the partnership before depreciation and amortization (EBITDA). Through December 25, 2005, our 33.8% share of the EBITDA of Texas-New Mexico Newspapers Partnership and beginning February 1, 2006, our 50% share of the EBITDA of Prairie Mountain Publishing Company have been included in Adjusted EBITDA Available to Company as they are an integral part of our cash flows from operations as defined by our debt covenants. Beginning December 26, 2005, we became the controlling partner of the Texas-New Mexico Newspapers Partnership at which time we began consolidating its results. See Note 4: Investments in California Newspapers Partnership and Texas-New Mexico Newspapers Partnership and Note 5: Acquisitions, Dispositions and Other Transactions of the notes to the consolidated financial statements of this Annual Report on Form 10-K for further discussion of the Texas-New Mexico Newspapers Partnership restructuring and the Prairie Mountain Publishing Company formation.
(c)		Not meaningful.

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 “Balance Sheet and Income Statement Display under the Equity Method of Investments in Certain Partnerships and Other Unincorporated Joint Ventures,” 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 our debt service and capital expenditure requirements. Our JOA agreements in Denver and Salt Lake City do not restrict cash distributions to the owners and in general our Denver and Salt Lake City 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 the 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 in Denver and Salt Lake City using pro-rata consolidation, including the percentage change between periods. The operations of the Charleston JOA and the Detroit JOA have not been included on a pro-rata consolidation basis. See Notes 2 and 3 to the consolidated financial statements for additional discussion 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


	Summary Selected Non-GAAP Financial Data
	Fiscal Years Ended June 30,
	2007			2006			2005			2007 vs. 2006			2006 vs. 2005
	(Dollars in thousands)
PRO-RATA CONSOLIDATED INCOME STATEMENT DATA:
Total Revenues	$	1,612,988		$	1,132,423		$	1,081,754			42.4	%		4.7	%

Cost of Sales		533,308			381,763			362,456			39.7			5.3
Selling, General and Administrative		832,549			565,416			526,755			47.2			7.3
Depreciation and Amortization		98,261			92,261			54,021			6.5			70.8
Interest Expense		84,699			55,827			49,679			51.7			12.4
Other (Income) Expense, Net		15,158			4,190			9,854			(b	)		(57.5	)

Total Costs and Expenses		1,563,975			1,099,457			1,002,765			42.2			9.6

Gain on Sale of Assets and Newspaper Properties		65,066			1,129			114			(b	)		(b	)

Minority Interest		(59,557	)		(35,033	)		(29,334	)		70.0			19.4

Net Income		35,642			1,077			39,880			(b	)		(b	)

CASH FLOW DATA (GAAP BASIS):
Cash Flows from:

Operating Activities	$	144,864		$	77,257		$	92,944
Investing Activities		(361,473	)		(64,454	)		(92,669	)
Financial Activities		225,270			(16,641	)		(60,749	)

PRO-RATA OTHER DATA^(a):
Adjusted EBITDA	$	247,131		$	185,244		$	192,543			33.4	%		(3.8	)%
Minority Interest in Adjusted EBITDA		(80,004	)		(46,541	)		(41,152	)		71.9			13.1
EBITDA of Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company		1,891			5,681			9,610			(66.7	)		(40.9	)

Adjusted EBITDA Available to Company	$	169,018		$	144,384		$	161,001			17.1	%		(10.3	)%


(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 Prairie Mountain Publishing Company and Adjusted EBITDA Available to Company. The Minority Interest in Adjusted EBITDA shown is calculated the same as described in footnote (b) under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating Results.” See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reconciliation of GAAP and Non-GAAP Financial Information.”

(b)		Not meaningful.

Fiscal Year 2007 Executive Overview

Fiscal year 2007 was strongly influenced by several large transactions. We spent a significant amount of time and human resources integrating, consolidating and adapting newly acquired newspaper operations (acquisitions and partnership formations) into MediaNews Group’s operations. We are also currently implementing, or developing plans to implement, further consolidations of our operations and other expense reductions related to fiscal year 2007 acquisitions. The integration in some instances will take several years due to the complexity of the changes, including logistics associated with consolidation of printing, editorial and finance functions. Furthermore, restrictions in labor agreements, which in many cases have been or will be re-negotiated, take time to manage. In addition, we are expanding our best practices (in both revenue generation and expense reductions) Company-wide (existing and newly acquired locations) in order to identify and implement strategies that will improve our overall performance. Some of these strategic changes were implemented during fiscal year 2007 and only a fraction of the benefit of the changes is reflected in our fiscal year 2007 operating results.

Our current year results were impacted by the following transactions completed during fiscal year 2007:

	•		On August 2, 2006, we acquired the San Jose Mercury News and Contra Costa Times and began managing and consolidating The Monterey County Herald and St. Paul Pioneer Press for The Hearst Corporation (“Hearst”). Under the agreement with Hearst, we have all of the economic risks and rewards associated with ownership of The Monterey County Herald and St. Paul Pioneer Press and retain all of the cash flows generated by them as a management fee. As a result, we began consolidating the financial statements of The Monterey County Herald and St. Paul Pioneer Press, along with the San Jose Mercury News and Contra Costa Times, beginning August 2, 2006.

	•		On August 2, 2006, we amended our bank credit facility to authorize a new $350.0 million term loan “C” facility which was used, along with borrowings under the revolver portion of our bank credit facility, to finance our share of the California Newspapers Partnership’s purchase of the San Jose Mercury News and Contra Costa Times.

	•		On September 29, 2006, we sold the Original Apartment Magazine.

	•		On December 15, 2006, we began managing for Hearst the Daily Breeze and three weekly newspapers, published in Torrance, California. The accounting treatment of the Daily Breeze is the same as the St. Paul Pioneer Press and The Monterey County Herald for the reasons previously described. As a result, we began consolidating the financial statements of the Torrance publications beginning December 15, 2006.

	•		On February 2, 2007, the California Newspapers Partnership acquired the Santa Cruz Sentinel.

	•		On March 30, 2007, we entered into an agreement with Hearst to manage The News-Times (Danbury, Connecticut). Under the agreement, we manage and control both the Connecticut Post (owned by us) and The News-Times (owned by Hearst) and are entitled to 73% of the combined profits and losses generated by the two newspapers. As a result, we began consolidating the operating results of The News-Times and recording minority interest for Hearst’s 27% interest beginning March 30, 2007. With the exception of the $27.0 million pre-tax nonmonetary gain on the “sale” of 27% of our interest in the Connecticut Post, this transaction had an immaterial effect on the operating results discussed below.

	•		We sold office buildings in Long Beach and Woodland Hills, California for a combined total of $49.0 million and recognized a $37.4 million pre-tax gain.

While our fiscal year 2007 revenues grew as a result of the acquisitions described above, on a same newspaper basis, we saw declines in advertising revenue in most of our markets. In addition, on a same newspaper basis, circulation revenue declined. The trend of growth in Internet advertising revenue continued as Internet-related revenues increased 7.7% in fiscal year 2007, after adjusting for acquisitions and dispositions. The Internet is a critical element of our overall strategy to expand our audience by delivering news and information to a larger, younger and more diverse audience, which in turn allows our advertising customers to take advantage of our expanded market reach.

In addition to the fiscal year 2007 transactions described above, certain transactions in fiscal years 2006 and 2005 had an impact on the comparisons of our results for the years ended June 30, 2007, 2006 and 2005.

In fiscal year 2006, transactions that affect comparisons include the following:

	•		In August 2005, we purchased The Detroit News, Inc. which included a limited partnership interest in the Detroit JOA. Because of the partnership structure and our ownership interest, we account for the preferred distributions using the cost method of accounting, with a portion of the distributions accounted for in other operating revenues for amounts paid to us for managing and providing the news and editorial content for The Detroit News.

	•		In September 2005, we amended our bank credit facility to refinance a portion of our long-term debt and reduce certain interest rate margins charged under the bank credit facility.

	•		Effective December 26, 2005, we restructured the Texas-New Mexico Newspapers Partnership whereby we contributed to the partnership our Pennsylvania newspapers: The Evening Sun (Hanover), the Lebanon Daily News and our interest in the partnership that publishes the York Daily Record and York Sunday News, which continues to operate under the terms of a joint operating agreement with The York Dispatch. Gannett, our partner in the Texas-New Mexico Newspapers Partnership, contributed the Public Opinion in Chambersburg, Pennsylvania. As a result of the contributions and amendment and restatement of the partnership agreement, the Texas-New Mexico Newspapers Partnership became a 59.4%-owned consolidated subsidiary of ours. Prior to the partnership restructuring, this investment was accounted for under the equity method of accounting.

	•		In February 2006, Prairie Mountain Publishing Company was formed after which time we no longer consolidate the results of Eastern Colorado Publishing Company and account for our investment in Prairie Mountain Publishing Company under the equity method of accounting. We own 50% of Prairie Mountain Publishing Company.

In fiscal year 2005, transactions that affect comparisons include the following:

	•		In January 2005, we purchased The Park Record published in Park City, Utah.

	•		We took advantage of the lower interest rates available to us in both the bond and bank financing markets by refinancing a portion of our long-term debt. We amended and refinanced a portion of our bank credit facility in August 2004 to take advantage of lower borrowing margins. We also retired $200.0 million of our 8 5/8% bonds in July 2004 with proceeds of our January 2004 issuance of $150.0 million 6 3/8% bonds and cash on hand.

	•		In June 2005, we purchased the 20% of The Denver Post Corporation which we did not own for approximately $45.9 million.

Comparison of Fiscal Years Ended June 30, 2007 and 2006

Revenues

Advertising Revenues. The aforementioned fiscal year 2007 and 2006 transactions had the net impact of increasing advertising revenues by $443.5 million for the year ended June 30, 2007, as compared to the same period in the prior fiscal year. Excluding the aforementioned transactions, advertising revenues decreased 6.6% for the year ended June 30, 2007, as compared to the same period in the prior fiscal year. All the major newspaper advertising revenue categories suffered declines, except Internet advertising revenue, which grew 7.7% for the year ended June 30, 2007. Within the print classified advertising category, classified real estate gains were strong in the first half of fiscal year 2007, only to be later offset by large decreases in classified automotive, employment and real estate in the second half of the year ended June 30, 2007.

Circulation Revenues. The aforementioned fiscal year 2007 and 2006 transactions had the net impact of increasing circulation revenues by $86.6 million for the year ended June 30, 2007, as compared to the same period in the prior fiscal year. Excluding the aforementioned transactions, circulation revenues decreased 5.6% for the year ended June 30, 2007 as compared to the same period in the prior fiscal year. The decrease was due to home delivery pricing pressures at most of our newspapers, which resulted in our offering greater discounts to acquire new and retain existing subscribers combined with a decline in total paid circulation at most of our newspapers.

Income from Unconsolidated JOAs

original purchase, editorial costs, miscellaneous revenue and other charges directly attributable to providing editorial content and news for newspapers party to a JOA. The following discussion takes into consideration all of the associated revenues and expenses just described. The results for the years ended June 30, 2007 and 2006 were negatively impacted by the accelerated depreciation taken on certain fixed assets at the production facilities in Denver that will be retired earlier than originally expected due to the construction of a new production facility. The results for the year ended June 30, 2006 were negatively impacted by the accelerated deprecation taken on certain fixed assets at the old production facility in Salt Lake City that were retired in the fourth quarter of our fiscal year 2006 when the new production facility in Salt Lake City became operational. Excluding depreciation and amortization, which were significantly impacted by the effect of accelerated depreciation, our income from unconsolidated JOAs in Denver and Salt Lake City was down approximately $5.7 million for the year ended June 30, 2007 as compared to the same period in the prior year. The results of the Denver JOA continue to be negatively impacted by a soft advertising market with revenues down 7.8%. To address the soft advertising market, the Denver JOA reduced its expenses 5.8%, through workforce reductions and other cost savings initiatives. Partially offsetting the impact of the cost cuts in fiscal year 2007 was severance related to the workforce reductions and the cost of buying out a lease in conjunction with consolidating the Denver JOA offices. Our share of these costs was approximately $1.6 million. Additional cost reductions will be implemented in fiscal year 2008 as the new production facility comes on line, including additional workforce reductions. Excluding the impact of the accelerated depreciation in the prior year, the results of the Salt Lake City JOA were up 8.5% for the year ended June 30, 2007 due to increased revenues and reduced costs associated with operating efficiencies from the new production facility.

Cost of Sales

The aforementioned fiscal year 2007 and 2006 transactions had the net impact of increasing cost of sales by $176.6 million for the year ended June 30, 2007, as compared to the same period in the prior fiscal year. Excluding the aforementioned transactions, cost of sales decreased 7.4% for the year ended June 30, 2007, as compared to the same period in the prior fiscal year. The majority of the decrease was caused by a reduction in newsprint expense and related production costs. Newsprint prices increased by 3.3% during fiscal year 2007, as compared to the same period in the prior fiscal year. Our average price of newsprint was $593 per metric ton for the year ended June 30, 2007, as compared to $574 per metric ton for the same period in the prior year. However, the increases in newsprint prices were more than offset by decreases in newsprint consumption of approximately 13.7% for the year ended June 30, 2007, primarily as a result of lower circulation volumes and a reduction in web-width from 50 inches to 48 inches at some of our suburban newspapers. The cost of newsprint began to decline in the quarter ended March 31, 2007.

Selling, General and Administrative

The aforementioned fiscal year 2007 and 2006 transactions had the net impact of increasing SG&A by $275.4 million for the year ended June 30, 2007 as compared to the prior year. Excluding the aforementioned transactions, SG&A decreased 1.9% for the year ended June 30, 2007 as compared to the same period in the prior fiscal year. Decreases were primarily in advertising sales costs due to the lower advertising revenues experienced during that same period. The current year-to-date period also includes a $1.3 million charge related to a severance obligation, payable over three years, to the Company’s former chief operating officer, $1.9 million of bonuses awarded to certain officers and employees in connection with the August 2, 2006 acquisitions and related transactions and increased costs related to the growth in our Internet operations. Expenses related to our Internet operations increased $2.4 million for the year ended June 30, 2007 as compared to the prior year, while Internet revenue grew $2.9 million for the same period on a same newspaper basis.

Interest Expense

The increase in interest expense was the result of an increase in the average debt outstanding, as well as an increase in the weighted average cost of debt. Significant borrowings impacting the year-over-year comparison related to the borrowings on February 2, 2007 for our share of CNP’s purchase of the Santa Cruz Sentinel, borrowings on August 2, 2006 for our share of CNP’s purchase of the San Jose Mercury News and Contra Costa Times, the funding for our share of the cost of the new production and office facility built in Salt Lake City, and the cash investment associated with the formation of the Prairie Mountain Publishing Company. For the year ended June 30, 2007, our average debt outstanding increased $285.7 million, or 31.7%, to $1,185.5 million, and our weighted average interest rate increased 62 basis points as compared to the prior year due to increases in LIBOR (the average daily one month rate of LIBOR increased 97 basis points, for the year ended June 30, 2007 as compared to the same period in prior year). The interest rates under our bank credit facility are based on LIBOR, plus a borrowing margin based on our leverage ratio.

Other (Income) Expense, Net

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

The charges incurred/(income recognized) for the year ended June 30, 2007 relate to litigation and settlement expense of $17.8 million associated with the acquisition of Kearns-Tribune, LLC (Salt Lake City) and our lawsuit filed against a former publisher of one of our newspapers, $0.8 million related to hedging and investing activities that did not qualify for hedge accounting under SFAS No. 133, $(6.6) million related to the change in value of the cost to repurchase an option we issued that provides the holder the opportunity to purchase one of our daily newspapers, $(6.6) million related to the receipt of life insurance proceeds, including interest, related to a policy redemption which was collected in October 2006 and $5.8 million associated with various other items that were not related to ongoing operations.

Equity Investment Income, Net

Included in equity investment income, net is our share of the net income (or loss) of our non-JOA equity investees as further described in Note 2: Significant Accounting Policies and Other Matters of the notes to consolidated financial statements. The decrease in equity investment income, net is largely due to the December 25, 2005 restructuring of the Texas-New Mexico Newspapers Partnership whereby as a result of the restructuring, we no longer account for our interest in the Texas-New Mexico Newspapers Partnership under the equity method of accounting and instead consolidate the partnership’s results. Offsetting some of this decline was the equity investment income from Prairie Mountain Publishing Company, which was formed on February 1, 2006.

Minority Interest

Minority interest expense increased by $24.5 million for the year ended June 30, 2007, as compared to the same period in the prior year. Our year-to-date increases are partly due to the aforementioned Texas-New Mexico Newspapers Partnership December 25, 2005 restructuring, which resulted in our consolidating the partnership and recording a minority interest related to our partner’s interest in the partnership. In addition, a portion of the increase relates to the CNP’s acquisition of the San Jose Mercury News and Contra Costa Times, effective August 2, 2006 and the Santa Cruz Sentinel, effective February 2, 2007. To a lesser extent, the accounting for the management agreement effective March 30, 2007 related to the Connecticut newspapers also increased minority interest expense.

Gain on Sale of Assets

In July 2006 and June 2007, respectively, we sold office buildings in Long Beach and Woodland Hills, California for approximately $49.0 million. We recognized a pre-tax gain of approximately $37.4 million on the sales of the buildings. Also, as a result of entering into an agreement with Hearst to manage their Danbury newspaper together with one of our newspapers, the Connecticut Post, we recognized a $27.0 million pre-tax nonmonetary gain on the “sale” of a 27% interest in the Connecticut Post.

Net Income

Net income for fiscal year 2007 was positively impacted by the gain on sale of assets and newspaper property transactions resulting from the sales of our buildings in Long Beach and Woodland Hills, California and the non-monetary gain recognized in conjunction with our entering into the management agreement in Connecticut. Our effective tax rate was 34% for the year ended June 30, 2007, as compared to 78% for the year ended June 30, 2006. The prior year’s effective tax rate was impacted by our contribution to the Prairie Mountain Publishing Company, an increase in the valuation allowances for state tax NOL carryforwards and recurring non-deductible expenses that had a large impact on the effective income tax rate in fiscal year 2006. Net income applicable to common stock reflects the impact of the accretion of Hearst’s cost of funds for its acquisitions of The Monterey County Herald, St. Paul Pioneer Press and Torrance Daily Breeze.

Comparison of Fiscal Years Ended June 30, 2006 and 2005

Revenues

On a same newspaper basis (after adjusting for the aforementioned fiscal year 2005 Park City acquisition, the fiscal year 2006 Detroit acquisition, Texas-New Mexico Newspapers Partnership restructuring and Prairie Mountain Publishing Company formation), the following changes occurred in our significant revenues categories for the year ended June 30, 2006 as compared to the prior year.

Advertising Revenues. Advertising revenues increased by approximately 1.7% for the year ended June 30, 2006 as compared to the prior year. The increase in advertising revenue was due principally to increases in national and preprint advertising categories, as well as increases in revenues from our Internet operations, offset in part by a decrease in retail (ROP, run of press) advertising. The classified advertising category remained relatively flat with increases in classified employment and classified real estate being offset by decreases in classified automotive.

Circulation Revenues. Circulation revenues decreased 4.9% for the year ended June 30, 2006 as compared to the prior year. The decrease was primarily due to home delivery pricing pressures at most of our newspapers, which resulted in our offering greater discounts to acquire new and retain existing subscribers, in order to help achieve our home delivery volume goals.

Income from Unconsolidated JOAs

As noted in our discussion of critical accounting policies, income from unconsolidated JOAs (Denver and Salt Lake City) includes our proportionate share of net income from those JOAs, the amortization of subscriber lists created by the original purchase, editorial costs, miscellaneous revenue and other charges directly attributable to providing editorial content and news for newspapers party to a JOA. The following discussion takes into consideration all of the associated revenues and expenses described above. The results for the year ended June 30, 2006 were negatively impacted by the accelerated depreciation taken on certain fixed assets at production facilities in Denver and Salt Lake City which have been or will be retired earlier than originally expected due to the construction or completion of new production facilities at their respective locations. Excluding depreciation and amortization which were significantly impacted by the effect of accelerated depreciation, income from unconsolidated JOAs in Denver and Salt Lake City was down approximately $11.8 million or 32.2% compared to the prior year. The results of the Denver JOA were negatively impacted by a soft advertising market combined with higher newsprint prices, increased circulation, promotion and delivery costs, and increased employee benefit costs. Excluding the impact of the accelerated depreciation, the results of the Salt Lake City JOA were relatively flat year over year. While the Salt Lake City JOA experienced many of the same operating expense increases that the Denver JOA did, its advertising revenue gains mostly kept pace with these expense increases.

Cost of Sales

The purchase of The Park Record in fiscal year 2005, the December 2005 Texas-New Mexico Newspapers Partnership restructuring and the February 2006 formation of Prairie Mountain Publishing Company had the net impact of increasing cost of sales by $12.9 million for the year ended June 30, 2006 as compared to the prior year. Excluding these transactions, cost of sales increased 2.3%. The increase was driven by an 8.7% increase in newsprint prices as compared to the same period in the prior year. Our average price of newsprint was $574 per metric ton for the year ended June 30, 2006 as compared to $528 per metric ton for the prior year. Increases in newsprint prices were offset in part by decreases in newsprint consumption of approximately 4.4% for the year ended June 30, 2006. Also impacting cost of sales were increased costs in our production and mailroom departments related to commercial printing and increased preprint volumes.

Selling, General and Administrative

to increased gas prices), and increased costs related to the growth in our advertising revenues and Internet operations. Expenses related to our Internet operations increased $5.0 million for the year ended June 30, 2006 as compared to the prior year, which was more than offset by Internet revenue growth of 38.4%.

Interest Expense

The increase in interest expense was the result of an increase in the average debt outstanding, as well as an increase in the weighted average cost of debt. Significant borrowings impacting the year over year comparison related to the August 3, 2005 purchase of our interest in the Detroit JOA, the June 10, 2005 purchase of the remaining 20% of The Denver Post Corporation which we did not own, funding for our share of the cost of the new production and office facility built in Salt Lake City, and the cash investment associated with the formation of the Prairie Mountain Publishing Company. For the year ended June 30, 2006, our average debt outstanding increased $34.9 million, or 4.0%, and our weighted average interest rate increased 64 basis points as compared to the prior year.

Other (Income) Expense, Net

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

The charges incurred for the year ended June 30, 2006 relate to litigation expense of $1.3 million associated with the acquisition of Kearns-Tribune, LLC (Salt Lake City), $0.8 million related to hedging and investing activities that did not qualify for hedge accounting under SFAS No. 133, $(2.0) million related to our contractual return on our investment in the Detroit JOA, $0.2 million in bank fees and $1.1 million associated with various other items that were not related to ongoing operations.

Equity Investment Income, Net

Included in equity investment income, net is our share of the net income (or loss) of our non-JOA equity investees as further described in Note 2: Significant Accounting Policies and Other Matters of the notes to consolidated financial statements. The $4.3 million decrease in equity investment income, net is largely due to the December 25, 2005 restructuring of the Texas-New Mexico Newspapers whereby as a result of the restructuring, we no longer account for our interest in the Texas-New Mexico Newspapers Partnership under the equity method of accounting and instead consolidate the partnership’s results.

Net Income

Net income for fiscal year 2006 was negatively impacted by the loss from unconsolidated JOAs which was caused by the accelerated depreciation taken on certain fixed assets at production facilities in Denver and Salt Lake City which have been or will be retired earlier than originally expected due to the construction or completion of new production facilities at their respective locations. Excluding the impact of accelerated depreciation at the Denver and Salt Lake City JOAs, pre-tax net income declined $6.8 million. Our effective tax rate was 78% for the year ended June 30, 2006, as compared to 34% for the year ended June 30, 2005. The effective tax rate was higher in fiscal year 2006 due to the contribution of our eastern Colorado newspapers to Prairie Mountain Publishing Company, which caused a change in how we account for the related book/tax basis differences, an increase in the valuation allowances for state tax NOL carryforwards, and recurring non-deductible expenses that had a larger impact on the effective income tax rate in fiscal year 2006 due to lower pre-tax book income in fiscal year 2006, as compared to the prior year.

Liquidity and Capital Resources

Our sources of liquidity are 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; however, 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.

Cash Flow Activity

The net cash flows related to operating activities increased $67.6 million for the year ended June 30, 2007, as compared to the prior year. A large portion of the increase is attributable to changes in operating assets and liabilities associated with the timing of payments of accounts payable and accrued liabilities and the timing of cash receipts. In addition, the increase in Adjusted EBITDA from acquisitions also impacted this change. These increases were partially offset by increased funding of our pension obligations during fiscal year 2007.

The net cash outflows related to investing activities increased by $297.0 million for the year ended June 30, 2007, as compared to the prior year primarily due to the August 2, 2006 purchase of the San Jose Mercury News and Contra Costa Times, as well as the February 2, 2007 purchase of the Santa Cruz Sentinel (net of partner contributions associated with the acquisitions), offset in part by cash inflows of $72.2 million from the sales of the Original Apartment Magazine, our office buildings in Long Beach and Woodland Hills, California and other smaller assets. Capital expenditures for the year ended June 30, 2007 were down $15.9 million year over year, largely as a result of the funding related to the completion of the Salt Lake City production and office facility.

The net cash flows related to financing activities increased by $241.9 million for the year ended June 30, 2007, as compared to the prior year. In the current period, borrowings of approximately $406.3 million were used to fund our share of the August 2, 2006 transactions. We also borrowed approximately $25.0 million to fund our share of the February 2, 2007 purchase of the Santa Cruz Sentinel. Activity for the year ended June 30, 2007 also included normal borrowings and paydowns on long-term debt. For the year ended June 30, 2006, activity included normal borrowings and paydowns on long-term debt, as well as borrowings to finance the purchase of our interest in the Detroit JOA and the Prairie Mountain Publishing Company. Excluding the funding for our fiscal year 2007 transactions, refinancing costs of the new credit facility, as well as the cash proceeds from the sale of the Long Beach and Woodland Hills buildings, the Original Apartment Magazine and redemption of a life insurance policy, we repaid approximately $106.1 million of debt for the year ended June 30, 2007.

Capital Expenditures


	Capital Expenditures
	Fiscal Year 2008 Plan										Fiscal Year 2007 Actual
	(Dollars in thousands)
	Wholly-		Non Wholly-			Our Share of					Wholly-		Non Wholly-			Our Share of
	Owned		Owned			Unconsolidated					Owned		Owned			Unconsolidated
	Subsidiaries		Subsidiaries			JOAs		Total			Subsidiaries		Subsidiaries			JOAs		Total
Total Capital Projects	$	16,845	$	16,076		$	21,548	$	54,469		$	16,621	$	15,015		$	46,379	$	78,015

Less Minority Partners’ Share		—		(7,264	)		—		(7,264	)		—		(6,867	)		—		(6,867	)

	$	16,845	$	8,812		$	21,548	$	47,205		$	16,621	$	8,148		$	46,379	$	71,148

Capital expenditures in fiscal year 2007, in addition to normal maintenance capital, included press web width reductions, press controls and the completion of the new printing and office facility in Salt Lake City. Capital expenditures also included spending related to office relocation and consolidation in both California and at the Denver corporate office. Our share of Unconsolidated JOAs relates primarily to the new printing facility in Denver.

Planned expenditures for fiscal year 2008, in addition to maintenance capital, include: front-end editorial systems for the Bay Area Newspapers Group, The Salt Lake Tribune and the Connecticut Newspapers; additional web width reduction projects and additional office relocations and consolidation in California. Planned expenditures for Unconsolidated JOAs relate primarily to the completion of the new printing facility in Denver. Carryover expenditures are mostly comprised of completing the web width reduction projects started in fiscal year 2007 and the multi-year Company-wide advertising and circulation systems installation. Management reviews the capital expenditure plan throughout the year and adjusts it as required to meet our business needs and performance. Capital expenditures related to these projects are expected to be funded either through available cash or borrowings under our bank credit facility.

Liquidity

On September 17, 2007, we amended our December 30, 2003 credit agreement (the “Credit Facility”). This amendment changed several provisions, including an increase to the consolidated total leverage ratio and the ratio of consolidated senior debt to consolidated operating cash flow covenants for the remaining life of the Credit Facility (effective June 30, 2007); a decrease to the ratio of consolidated operating cash flow to consolidated fixed charges for the quarters ending September 30

and December 31, 2007; and a voluntary reduction to the commitments under the revolver to $235.0 million from the previous $350.0 million effective October 1, 2007. As a result of the amendment, interest rate margins will increase by 50 basis points for all loan tranches under the Credit Facility. Certain other definitional and minor structural changes were also made to the Credit Facility. An amendment fee of 0.25% was paid to all consenting lenders upon closing of the amendment. The amendment maintained the revolving credit facility ($235.0 million effective October 1, 2007), the $100.0 million term loan “A,” the $147.3 million term loan “B” and the $350.0 million term loan “C.” Any payments on the term loans cannot be reborrowed, regardless of whether such payments are scheduled or voluntary. On June 30, 2007, the balances outstanding under the revolving credit portion of the Credit Facility, term loan “A,” term loan “B” and term loan “C” were $60.2 million, $100.0 million, $144.3 million and $346.5 million, respectively. Giving effect to the October 1, 2007 reduction to the revolver, the amount available under the revolving portion of the Credit Facility, net of letters of credit, would have been $157.7 million at June 30, 2007. The total amount we can borrow at any point in time under the revolving credit portion of the bank credit facility may be reduced by limits imposed by the financial covenants of our various debt agreements.

S.F. Holding Corporation (“Stephens”), a 26.28% partner in 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, Stephens’ 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 Stephens to exercise its put. No amounts are recorded in our financial statements related to the potential liability associated with Stephens’ put right.

In September 2005, the management committee of the Denver JOA authorized the incurrence of up to $150.0 million of non-recourse debt by the Denver JOA to finance furniture, fixtures and computers for its new office building and new presses and related equipment and building costs related to consolidation of two existing production facilities into one for the Denver JOA. We own a 50% interest in the Denver JOA. As of June 30, 2007, our share of the debt incurred by the Denver JOA under the $150.0 million credit facility was approximately $57.0 million. This debt is not reflected in our consolidated financial statements.

MediaNews and Stephens have agreed to form a new partnership whereby we would contribute The Monterey County Herald to a newly formed partnership and Stephens would pay us approximately $27.4 million in exchange for a 32.64% interest in the new partnership. This transaction is expected to be completed shortly after The Monterey County Herald is acquired from Hearst (See Note 5: Acquisitions, Dispositions and Other Transactions – Hearst Stock Purchase Agreement).

As of June 30, 2007, the Company was in compliance with all its financial covenants under the Company’s bank credit facility (as amended) and subordinated note agreements. In order to remain in compliance with these covenants in the future, the Company needs to increase or maintain its existing “Consolidated Operating Cash Flow” as defined in its credit agreements, and/or reduce its total debt outstanding.

Our ability to service our debt and fund planned capital expenditures depends on our ability to continue to generate sufficient operating cash flows in the future.

We estimate minimum contributions to our defined benefit pension plans in fiscal year 2008 will be approximately $9.0 to $10.0 million.

Distributions from Partnerships

Set forth below is a description of the ownership structure and earnings-distribution provisions of our Denver, Salt Lake City and Detroit JOAs, as well as the CNP, the Texas-New Mexico Newspapers Partnership, Prairie Mountain Publishing Company and Connecticut partnership and management agreements:

	•		Through our wholly-owned subsidiary, Kearns-Tribune, LLC, we own a 58% interest in the Salt Lake City JOA. Under the agreement, 58% of the Salt Lake City JOA’s net income (subject to certain small adjustments), less their working capital needs and other minor adjustments, is paid to Kearns-Tribune, LLC and is distributed (generally) weekly.

	•		Through our wholly-owned subsidiary, The Denver Post Corporation, we own 50% of The Denver Newspaper Agency, LLP. Under the Denver Newspaper Agency JOA agreement, the partnership is required to distribute 50% of

its monthly EBITDA (and other funds available for distribution), less working capital required by the partnership and payments under its separate credit agreements, to The Denver Post Corporation.

	•		Through our wholly-owned subsidiary, The Detroit News, Inc., we own a limited partnership interest in Detroit Newspaper Partnership, L.P. Under the Detroit JOA agreement, the partnership is required to make fixed preferred distributions to us monthly, as well as reimburse us for our news and editorial costs. The fixed preferred distributions are as follows: $5.0 million for years 2006 and 2007; $4.0 million for years 2008 and 2009; $3.0 million for years 2010 and 2011; $2.0 million for the year 2012; and $1.9 million for all remaining years. Beginning in 2009, we may receive incremental distributions based on profit growth of the Detroit JOA.

	•		Through our wholly-owned subsidiary, West Coast MediaNews LLC, we own a 54.23% interest in the California Newspapers Partnership (“CNP”). Under the terms of the partnership agreement, we are entitled to monthly distributions of the partnership’s EBITDA in proportion to our partnership interest, less working capital required and debt service payments (total CNP debt, excluding the debt and capital lease we contributed to the partnership, is $0.9 million at June 30, 2007 of which our share is $0.5 million).

	•		Through our wholly-owned subsidiary, New Mexico-Texas MediaNews LLC, we own a 59.4% interest in the Texas-New Mexico Newspapers Partnership. Pursuant to the partnership agreement, the partnership management committee is required to determine the amount of earnings (before depreciation and amortization) or other partnership funds available for distribution for each accounting period and distribute (generally monthly) 59.4% of such funds to New Mexico-Texas MediaNews LLC.

	•		Through our wholly-owned subsidiary, Eastern Colorado Publishing Company, we own 50% of the Prairie Mountain Publishing Company. Under the Prairie Mountain Publishing Company partnership agreement, monthly distributions equal to 50% of EBITDA (and other funds available for distribution), less working capital required by the partnership, are required to be made to Eastern Colorado Publishing Company.

	•		In March 2007, in connection with Hearst’s acquisition of The News-Times in Danbury, Connecticut, we entered into a management agreement with Hearst regarding The News-Times. Under the agreement, distributions are to be made monthly, and we are entitled to 73% of the distributions, increased for management fees to be paid by Hearst to us, and adjusted so that each partner retains 100% of the proceeds related to the disposition of its contributed assets (if any dispositions occur during the period).

Off-Balance Sheet Arrangements

Our share of long-term debt in unconsolidated JOAs (Denver) was approximately $59.3 million at June 30, 2007. This debt is non-recourse to us.

Contractual Obligations

The following table represents our contractual obligations as of June 30, 2007:


			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
	(Dollars in thousands)
Long-Term Debt	$	1,118,870	$	17,343	$	208,343	$	106,108	$	787,076
Capital Lease Obligations, Net of Imputed Interest		5,763		245		579		720		4,219
Operating Leases		61,089		11,207		16,872		10,462		22,548
Purchase Obligations⁽¹⁾		83,733		42,608		26,064		3,507		11,554
Other Long-Term Liabilities Reflected on the Balance Sheet under GAAP		25,509		—		1,991		2,032		21,486

Total	$	1,294,964	$	71,403	$	253,849	$	122,829	$	846,883

(1)

Purchase obligations primarily include commitments to purchase newsprint. One of our newsprint contracts requires us to purchase newsprint at market. For purposes of this disclosure we used the market price as of June 2007. It is difficult to predict the price of newsprint over the term of the contract.

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 Consolidated Income Statement Data) presented in the “Selected Consolidated Financial Data,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this annual report on Form 10-K 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).


	Years Ended June 30,
	2007			2006			2005			2004			2003
				(Dollars in thousands)
NON-GAAP FINANCIAL DATA(a)
Cash Flows from Operating Activities (GAAP measure)	$	144,864		$	77,257		$	92,944		$	80,174		$	89,759
Net Change in Operating Assets and Liabilities		(70,132	)		(4,132	)		25,678			20,126			8,619
Distributions of Net Income Paid to Minority Interest		57,851			35,033			28,167			32,457			38,765
Distributions of Net Income from Unconsolidated JOAs		(39,535	)		(44,120	)		(71,878	)		(66,828	)		(66,326	)
Distributions of Net Income from Equity Investments		(1,723	)		(5,228	)		(9,511	)		(9,676	)		(4,360	)
Interest Expense		82,388			55,564			49,481			57,036			64,252
Bad Debt Expense		(12,091	)		(9,893	)		(8,065	)		(7,405	)		(9,632	)
Pension Expense, Net of Cash Contributions		4,205			(2,427	)		(1,463	)		(1,082	)		(31	)
Direct Costs of the Unconsolidated JOAs, Incurred Outside of the Unconsolidated JOAs(b)		44,096			46,318			44,286			42,352			39,226
Net Cash Related to Other (Income), Expense		10,699			8,963			4,807			5,255			9,675

Adjusted EBITDA		220,622			157,335			154,446			152,409			169,947
Minority Interest in Adjusted EBITDA		(80,004	)		(46,541	)		(41,152	)		(45,747	)		(49,089	)
Combined Adjusted EBITDA of Unconsolidated JOAs		26,509			27,909			38,097			39,842			40,371
EBITDA of Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company^(c)		1,891			5,681			9,610			10,108			3,275

Adjusted EBITDA Available to Company	$	169,018		$	144,384		$	161,001		$	156,612		$	164,504

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 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 Texas-New Mexico Newspapers Partnership (beginning December 26, 2005), The Denver Post Corporation (through June 10, 2005) and The York Newspaper Company (through April 30, 2004), our less than 100% owned consolidated subsidiaries as well as the Connecticut newspapers (beginning March 30, 2007) (“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 (through December 25, 2005) and our proportionate share of EBITDA of the Prairie Mountain Publishing Company (beginning February 1, 2006) (see footnote (c)).
(b)		Direct Costs of Unconsolidated JOAs. Direct Costs of the Unconsolidated JOAs, Incurred Outside of the Unconsolidated JOAs includes the editorial costs, publishing related revenues, 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, but excludes depreciation and amortization and other expense not related to continuing operations as these costs are not included in Adjusted EBITDA. See Note 3: Joint Operating Agencies in the footnotes to our consolidated financial statements for further description and analysis of this adjustment.
(c)		The Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company. The Texas-New Mexico Newspapers Partnership agreement, effective March 3, 2003, and the Prairie Mountain Publishing Company agreement, effective February 1, 2006, require the partnerships to make distributions equal to the earnings of the partnership before depreciation and amortization (EBITDA). From March 3, 2003 through December 25, 2005, our 33.8% share of the EBITDA of Texas-New Mexico Newspapers Partnership and, beginning February 1, 2006, our 50% share of the EBITDA of Prairie Mountain Publishing Company have been included in Adjusted EBITDA Available to Company as they are an integral part of our cash flows from operations as defined by our debt covenants. Beginning December 26, 2005, we became the controlling partner of the Texas-New Mexico Newspapers Partnership at which time we began consolidating its results. See Note 4: Investments in California Newspapers Partnership and Texas-New Mexico Newspapers Partnership and Note 5: Acquisitions, Dispositions and Other Transactions of the notes to the consolidated financial statements of this Form 10-K for further discussion of the Texas-New Mexico Newspapers Partnership restructuring and the Prairie Mountain Publishing Company formation.

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


	Years Ended June 30,
	2007			2006			2005
	(Dollars in thousands)
NON-GAAP FINANCIAL DATA(a)
Cash Flows from Operating Activities (GAAP measure)	$	144,864		$	77,257		$	92,944
Net Change in Operating Assets and Liabilities		(70,132	)		(4,132	)		25,678
Distributions of Net Income Paid to Minority Interest		57,851			35,033			28,167
Distributions of Net Income from Unconsolidated JOAs		(39,535	)		(44,120	)		(71,878	)
Distributions of Net Income from Equity Investments		(1,723	)		(5,228	)		(9,511	)
Interest Expense		82,388			55,564			49,481
Bad Debt Expense		(12,091	)		(9,893	)		(8,065	)
Pension Expense, Net of Cash Contributions		4,205			(2,427	)		(1,463	)
Direct Costs of the Unconsolidated JOAs, Incurred Outside of the JOAs^(c)		44,096			46,318			44,286
Combined Adjusted EBITDA of Unconsolidated JOAs^(b)		26,509			27,909			38,097
Net Cash Related to Other (Income), Expense		10,699			8,963			4,807

Adjusted EBITDA		247,131			185,244			192,543
Minority Interest in Adjusted EBITDA		(80,004	)		(46,541	)		(41,152	)
EBITDA of Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company^(d)		1,891			5,681			9,610

Adjusted EBITDA Available to Company	$	169,018		$	144,384		$	161,001

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 minority interest in the Adjusted EBITDA generated from the California Newspapers Partnership and the Texas-New Mexico Newspapers Partnership (beginning December 26, 2005), our less than 100% owned consolidated subsidiaries, as well as the Connecticut newspapers (beginning March 30, 2007) (“Minority Interest in Adjusted EBITDA”); (ii) increasing Adjusted EBITDA by our proportionate share of EBITDA of the Texas-New Mexico Newspapers Partnership (through December 25, 2005) and our proportionate share of the EBITDA of the Prairie Mountain Publishing Company (beginning February 1, 2006) (see footnote (d)). Note that pro-rata consolidation already takes into account our proportionate share of the results from our unconsolidated JOAs (Denver and Salt Lake City).

	(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 and The Denver Post. See Note 1: Significant Accounting Policies and Other Matters — Joint Operating Agencies and Note 3: Denver and Salt Lake City Joint Operating Agencies in the notes to our condensed consolidated financial statements for further description and analysis of this adjustment.

	(d)		EBITDA of Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company. The Texas-New Mexico Newspapers Partnership and Prairie Mountain Publishing Company agreements require the partnerships to make distributions equal to the earnings of the partnership before depreciation and amortization (EBITDA). Through December 25, 2005, our 33.8% share of the EBITDA of Texas-New Mexico Newspapers Partnership and beginning February 1, 2006, our 50% share of Prairie Mountain Publishing Company, have been included in Adjusted EBITDA Available to Company, as they are an integral part of our cash flows from operations as defined by our debt covenants.

Reconciliation of Income Statement Data presented on a historical GAAP basis to Non-GAAP Income Statement Data presented on a pro-rata consolidation basis.

See footnotes (1) and (2) at the end of these reconciliations for a description of the adjustments made. See footnote (a) on the preceding page for a description of our method of calculating Adjusted EBITDA. All amounts shown in the following reconciliations are in thousands.


	Year Ended June 30, 2007
				Unconsolidated			As Presented on
	As Presented			JOAs Pro-Rata			a Pro-Rata
	Under GAAP			Adjustment(1)			Basis
Total Revenues	$	1,329,840		$	283,148		$	1,612,988

Income from Unconsolidated JOAs		(10,418	)		10,418			—

Cost of Sales		421,343			111,965			533,308
Selling, General and Administrative		687,875			144,674			832,549
Depreciation and Amortization		68,670			29,591			98,261
Interest Expense		82,388			2,311			84,699
Other (Income) Expense, Net		11,223			3,935			15,158

Total Costs and Expenses		1,271,499			292,476			1,563,975

Gain on Sale of Assets and Newspaper Properties		66,156			(1,090	)		65,066

Minority Interest		(59,557	)		—			(59,557	)

Net Income		35,642			—			35,642

Adjusted EBITDA⁽²⁾	$	220,622		$	26,509		$	247,131


	Year Ended June 30, 2006
				Unconsolidated		As Presented on
	As Presented			JOAs Pro-Rata		a Pro-Rata
	Under GAAP			Adjustment(1)		Basis
Total Revenues	$	835,876		$	296,547	$	1,132,423

Loss from Unconsolidated JOAs		(23,298	)		23,298		—

Cost of Sales		260,939			120,824		381,763
Selling, General and Administrative		417,602			147,814		565,416
Depreciation and Amortization		44,067			48,194		92,261
Interest Expense		55,564			263		55,827
Other (Income) Expense, Net		1,440			2,750		4,190

Total Costs and Expenses		779,612			319,845		1,099,457

Gain on Sale of Newspaper Properties		1,129			—		1,129

Minority Interest		(35,033	)		—		(35,033	)

Net Income		1,077			—		1,077

Adjusted EBITDA⁽²⁾	$	157,335		$	27,909	$	185,244


	Year Ended June 30, 2005
				Unconsolidated			As Presented on
	As Presented			JOAs Pro-Rata			a Pro-Rata
	Under GAAP			Adjustment(1)			Basis
Total Revenues	$	779,279		$	302,475		$	1,081,754

Income from Unconsolidated JOAs		23,291			(23,291	)		—

Cost of Sales		242,653			119,803			362,456
Selling, General and Administrative		382,180			144,575			526,755
Depreciation and Amortization		40,598			13,423			54,021
Interest Expense		49,481			198			49,679
Other (Income) Expense, Net		8,669			1,185			9,854

Total Costs and Expenses		723,581			279,184			1,002,765

Minority Interest		(29,334	)		—			(29,334	)

Net Income		39,880			—			39,880

Adjusted EBITDA⁽²⁾	$	154,446		$	38,097		$	192,543


(1)		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 the Salt Lake City JOA is 58%, while our interest in the Denver Newspaper Agency is 50%. This adjustment also includes the editorial costs, publishing related revenues, depreciation, amortization, and other direct costs incurred outside of the JOAs by our consolidated subsidiaries associated with The Salt Lake Tribune and The Denver Post. See Note 3: Joint Operating Agencies in the footnotes to our consolidated financial statements for further description and analysis of the components of this adjustment.

(2)		Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure.

Item 7A: Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk arising from changes in interest rates associated with our bank debt, which includes our bank term loans 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 the reporting date.

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


																						Fair Value
	Years Ended June 30,																					2007
	2008			2009			2010			2011			2012			Thereafter			Total			(Liability)
	(Dollars in thousands)
Liabilities
Long-Term Debt including Current Portion
Fixed Rate	$	—		$	—		$	—		$	—		$	—		$	447,156		$	447,156		$	382,900
Average Interest Rate		9.90	%		9.90	%		9.90	%		9.90	%		9.90	%		9.90	%

Variable Rate	$	14,973		$	29,973		$	174,754		$	98,817		$	3,500		$	329,000		$	651,017		$	651,017
Average Interest Rate^(c)		7.39	%		7.39	%		7.39	%		7.39	%		7.39	%		7.39	%

Total																			$	1,098,173	^(a)

(a)

The long-term debt (including current portion) of $1,098.2 million from the Market Risk table above differs from total long-term debt of $1,118.9 million reported in Note 6: Long-Term Debt of the notes to the consolidated financial statements due to the following (in millions):


$	1,098.2	Balance per table above
	20.7	(b)

$	1,118.9	Total per Note 6: Long-Term Debt

	(b)		Relates 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.

	(c)		Reflects our September 17, 2007 amended credit facility, which, among other things, increased borrowing margins. See Note 17: Subsequent Events of the notes to the consolidated financial statements for further discussion.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K 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 annual report on Form 10-K 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 Annual Report on Form 10-K. 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 increased competition from Internet advertising and news sites 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.

Item 8: Financial Statements and Supplementary Data

The response to this item is filed as a separate part of this report. See Item 15: Exhibits and Financial Statement Schedules.

Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A: Controls and Procedures

As of June 30, 2007, 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 Rules 15d-15(e) of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer, President and Chief Financial Officer concluded that our disclosure controls and procedures were sufficiently effective to provide reasonable assurance that material information regarding us and/or 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 fourth quarter of our fiscal year 2007, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

The Company’s management, including the Chief Executive Officer, President and Chief Financial Officer, 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 errors or mistakes. 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.

Item 9B: Other Information

None

PART III

Item 10: Directors, Executive Officers and Corporate Governance

Set forth below are the names, ages and titles and a brief account of the business experience of each person who is a director, executive officer or other significant employee of ours.


Name	Age		Title
Richard B. Scudder		94	Chairman of the Board and Director
William Dean Singleton		56	Vice Chairman and Chief Executive Officer and Director
Joseph J. Lodovic, IV		46	President
Steven B. Rossi		58	Executive Vice President and Chief Operating Officer
Anthony F. Tierno		62	Senior Vice President of Operations
Michael R. Petrak		49	Senior Vice President Marketing
Stephen M. Hesse		59	Senior Vice President Circulation
David J. Butler		57	Vice President News
Ronald A. Mayo		46	Vice President and Chief Financial Officer
James L. McDougald		54	Treasurer
Michael J. Koren		40	Vice President and Controller
Charles M. Kamen		59	Vice President Human Resources
David M. Bessen		53	Vice President and Chief Information Officer
Patricia Robinson		65	Secretary
Jean L. Scudder		53	Director
Howell E. Begle, Jr.		63	Director

Each director is elected annually and serves until the next annual meeting of shareholders or until his/her successor is duly elected and qualified. Our directors are not compensated for their service as directors. They do, however, receive reimbursement of expenses incurred from the attendance at Board of Directors meetings. Please see Item 13: Certain Relationships and Related Transactions for a description of consulting payments made to Mr. Scudder. Our executive officers are appointed by and serve at the pleasure of the Board of Directors.

Business Experience

Richard B. Scudder has served as Chairman of the Board and a Director of MediaNews since 1985.

William Dean Singleton has served as Vice Chairman and Chief Executive Officer and a Director of MediaNews since 1985. He is also the Publisher of The Denver Post and The Salt Lake Tribune.

Joseph J. Lodovic, IV has served as President of MediaNews since February 2001. Prior thereto, he served as Executive Vice President and Chief Financial Officer from 1993 to February 2001. Mr. Lodovic has been with MediaNews since 1987.

Steven B. Rossi has served as Executive Vice President and Chief Operating Officer of MediaNews since September 2006. Prior thereto he served as Senior Vice President and Chief Financial Officer of Knight Ridder Inc. from January 2005 until its acquisition by The McClatchy Company in June 2006. He previously served as President/Newspaper Division of Knight Ridder from 2001 to 2004.

Anthony F. Tierno has served as Senior Vice President of Operations since February 2001. Prior thereto, he served as Executive Vice President and Chief Operating Officer of MediaNews from 1993 to February 2001. Mr. Tierno has been with MediaNews since its inception in 1985.

Michael R. Petrak has served as Senior Vice President of Marketing since November 2006. Prior thereto, he was Publisher and President of the (Boise) Idaho Statesman from 2005 to July 2006. Prior thereto, he served as the Vice President of Marketing of Knight-Ridder from 2001 to 2005.

Stephen M. Hesse has served as Senior Vice President Circulation since December 2006. Prior thereto, he served as Vice President Circulation from 1996 to December 2005. Mr. Hesse also served as Senior Vice President Circulation at the Newspaper Agency Corporation in Salt Lake City from December 2005 to December 2006.

David J. Butler has served as Vice President News since June 2007. Prior thereto, he was editor and publisher of The Detroit News. Mr. Butler joined MediaNews when it acquired the Los Angeles Daily News in 1997, where he was the editor and also then served as Executive Vice President for MediaNews’ Los Angeles Newspapers Group.

Ronald A. Mayo has served as Vice President and Chief Financial Officer since February 2001. Prior thereto, he served as Vice President Finance and Controller from September 1994 to February 2001.

James L. McDougald has served as Treasurer since September 1994. Prior thereto, he was Controller for MediaNews from 1988 to 1994.

Michael J. Koren has served as Vice President and Controller since July 2001.

Charles M. Kamen has served as Vice President Human Resources for MediaNews Group since he joined the Company in April 2000.

David M. Bessen has served as Vice President and Chief Information Officer since November 2005. Prior thereto, he served as Director of Information Services for Copley Press from 1996 to 2005.

Patricia Robinson has served as Secretary of MediaNews since 1986. Ms. Robinson is the sister of Mr. William Dean Singleton.

Jean L. Scudder has served as a Director of MediaNews since July 1998. Ms. Scudder is the daughter of Mr. Richard B. Scudder.

Howell E. Begle, Jr. has served as a Director of MediaNews since November 1996. Mr. Begle is Of Counsel to Hughes Hubbard & Reed LLP, which law firm is counsel to MediaNews and its affiliates.

Audit Committee Financial Expert

We are not a listed issuer as defined in Rule 10A-3 under the Exchange Act and therefore are not required to have an audit committee comprised of independent directors; our board of directors acts as our audit committee. Additionally, we do not have an audit committee financial expert, as that term is defined by Item 407(d)(5) of Regulation S-K.

Code of Ethics

We have adopted a code of ethics that applies to all employees and officers of MediaNews. You may obtain a copy of our code of ethics, without charge, by request directed to Ronald A. Mayo, at MediaNews Group, Inc., 101 West Colfax, Suite 1100, Denver, CO 80202, (303) 954-6360.

Item 11: Executive Compensation

Compensation Discussion and Analysis

Overview

Our goal for the named executive officer compensation program is the same as our goal for operating the Company – to create long-term value for our shareholders by growing revenues, increasing operating cash flows, and reducing debt. To that end, we have designed and implemented compensation programs for our named executives to reward them for improving financial and operating performance and to encourage them to remain with the Company for their long and productive careers. Most of our compensation elements fulfill one or both of our performance and retention objectives. These elements consist of salary, annual bonus, restricted stock units (RSU), deferred compensation, postretirement medical, and other

benefits. Most of these elements are designed to reward achievement of objective strategic and financial performance criteria and longevity with us. In deciding on the type and amount of compensation for each executive, we focus on both current pay and the opportunity for future compensation growth from long-term incentive plans.

Our Board of Directors does not maintain a compensation committee and the functions of a compensation committee are performed by William Dean Singleton and Joseph J. Lodovic, IV, our Chief Executive Officer and President, respectively. Mr. Singleton is also Vice Chairman of our Board. Compensation of Messrs. Singleton and Lodovic are largely determined by the terms of their respective employment agreements, which were approved by our Board of Directors. All aspects of Mr. Lodovic’s compensation outside Mr. Lodovic’s employment agreement are approved by Mr. Singleton. All aspects of Mr. Singleton’s compensation outside of his employment agreement are approved by the Board of Directors.

Compensation Objectives

Performance. Key elements of compensation that depend upon the named executive’s performance include:

	•		An annual cash bonus that is based on an assessment of the executive’s performance against pre-determined quantitative and qualitative measures within the context of the Company’s overall performance;

	•		equity incentive compensation in the form of RSUs, the value of which is contingent upon the long-term performance of MediaNews; and

	•		a supplemental retirement plan, under which company contributions are dependent upon the achievement of Company performance objectives.

Base salary and cash bonuses are designed to reward annual achievements and be commensurate with the executive’s scope of responsibilities, leadership activities, management results and effectiveness. Our other key elements of compensation focus on motivating and challenging the executive to achieve superior, longer-term operating results.

Retention. We attempt to retain our executives by using continued service as a key determinant of the total long-term compensation opportunity. Key elements of compensation that require continued service to receive any, or maximum, payout include:

	•		the extended vesting terms on our RSU Plan, requiring a minimum of 20 years of service or a combined age and service equal to 72 years, with five years as a plan participant;

	•		our supplemental retirement plan, under which company contributions vest over 10 years with zero vesting in the first three years; and

	•		our retiree medical program which requires three years of participation combined with the executives’ age and years of service equal 70 before becoming eligible for the benefit;

Implementing Our Objectives

Determining Compensation. We rely upon our judgment in making compensation decisions, after reviewing the performance of the Company and carefully evaluating an individual executive’s performance during the year against established goals, business responsibilities, current compensation arrangements and long-term career potential to play a key role in attaining our long-term financial goals. Specific factors affecting compensation decisions for the named executives include:

	•		key financial measurements such as revenue growth, operating profit growth, operating margins, and cash flow from operating activities;

	•		strategic objectives such as acquisitions, dispositions, joint ventures, partnerships and technological innovation;

	•		achieving specific operational goals for the Company or a particular group of newspapers by the named executive, including attracting and retaining both circulation and advertising customers, improving productivity, process simplification, and managing enterprise risk; and

•

achieving goals within their organizational structure such as clustering and consolidation of operations to improve cost management and grow revenues.

We generally do not adhere to rigid formulas or necessarily react to short-term changes in business performance in determining the amount and mix of compensation elements. We incorporate flexibility into our compensation programs and the assessment process to respond to and adjust for changes in our evolving business environment and provide the compensation necessary to retain our named executives. Our mix of compensation elements is designed to reward recent results and motivate long-term performance through a combination of cash, deferred compensation and equity awards. We also seek to balance compensation elements that are based on financial, operational and strategic metrics. We believe the most important indicator of whether our compensation objectives are being met is our ability to motivate our named executives to deliver superior performance so that we retain them with MediaNews during their careers on a cost-effective basis.

Forms of Compensation

Employment and Other Agreements

Under the terms of Mr. Singleton’s Employment Agreement, which was amended and restated effective July 1, 2005, Mr. Singleton is currently entitled to receive cash compensation at an annual rate of $1,087,200, subject to annual increase of not less than 5%. In addition, Mr. Singleton is entitled to receive an annual cash bonus of up to $500,000 for each fiscal year based on a comparison of our actual profits to budgeted profits during such fiscal year, as follows: if operating profits for such fiscal year are 100% or more of budget, then the bonus amount payable is $450,000, plus 5% of the excess of operating profits over budget, up to a total of an additional $50,000; if operating profits of such fiscal year are 95% or more (but under 100%) of budget, then the bonus amount payable is $350,000; if operating profits of such fiscal year are 90% or more (but under 95%) of budget, then the bonus amount payable is $250,000; if operating profits of such fiscal year are 85% or more (but under 90%) of budget, then the bonus amount payable is $150,000; if operating profits of such fiscal year are 80% or more (but under 85%) of budget, then the bonus amount payable is $100,000; if operating profits of such fiscal year are under 80% of budget, then no bonus is payable. Discretionary bonuses may be paid in addition to these amounts if approved by the Board of Directors. Mr. Singleton’s Employment Agreement expires on December 31, 2009, but is automatically renewed for successive one-year terms unless either party gives notice terminating the Employment Agreement at least 120 days prior to the expiration of the existing term. Additionally, Mr. Singleton’s Employment Agreement may be terminated prior to the expiration of the existing term under certain circumstances. Under Mr. Singleton’s Employment Agreement, he is eligible to participate in equity ownership and incentive plans established for executive personnel. Mr. Singleton’s Employment Agreement also provides for him to be reimbursed for the annual premium (up to a maximum premium of $100,000 per year) on up to $40 million of term life insurance insuring his spouse as part of his estate planning.

Mr. Singleton is entitled to severance payments if his employment is terminated by the Company without cause or by Mr. Singleton for good reason (as those terms are defined in his employment agreement). In addition, if the Employment Agreement terminates by expiration at the end of the initial term or any renewal term, Mr. Singleton is entitled to receive a cash payment equal to his base annual salary in effect immediately prior to termination, plus an amount equal to the maximum annual bonus he is eligible to earn. If there is a change in control, Mr. Singleton is entitled to receive a cash payment equal to three times the sum of (i) his annual salary in effect at termination, plus (ii) the projected bonus payable to him in respect of the Company’s full fiscal year ending immediately following termination, plus (iii) the deemed annual value of all fringe benefits being made available to him immediately prior to termination. In the event any payment made to or benefit provided to Mr. Singleton due to termination, the Company shall pay to Mr. Singleton an additional payment (the “Gross-Up Payment”) in an amount such that after payment by him of all taxes (including federal, state and local income taxes, employment taxes, and any interest or penalties imposed with respect to such taxes), including any taxes imposed upon the Gross-Up Payment, he will retain a net amount of the Gross-Up Payment equal to the excise tax imposed upon the payments. Mr. Singleton’s Employment Agreement contains a two-year non-compete covenant for all geographical areas in which newspapers are owned or managed by us and or our subsidiaries with paid print circulation in excess of 25,000 at the time of termination of the Employment Agreement; provided, however that the ownership of up to 5% of any class of publicly traded securities of any entity shall not be deemed to be a violation. In the event of his disability, Mr. Singleton has the right to require MediaNews to purchase his common stock from time to time during his lifetime in an aggregate amount not to exceed $1.0 million in any fiscal year. At June 30, 2007, the total estimated cost (determined actuarially) of the repurchase would be $25.9 million and such amount is recorded as a component of “Putable Common Stock” on our balance sheet. From 1996 through 2002, MediaNews advanced a total of $1.5 million to the Singleton Irrevocable Trust (see Item 12:

Security Ownership of Certain Beneficial Owners and Management) to fund premiums on cash surrender life insurance policies covering Mr. Singleton and his wife. The advances are recorded in our consolidated balance sheet as a component of other long-term assets. Advances will be repaid when the policy is surrendered or earlier at Mr. Singleton’s option. No interest is charged to Mr. Singleton on these advances. No funding by MediaNews of this insurance coverage has occurred subsequent to July 2002. The cash surrender value life insurance policies were originally purchased in order to mitigate the impact of estate taxes that may be due on MediaNews stock held in the Singleton Revocable Trust as a result of the death of Mr. Singleton and his spouse and the resulting need for us to repurchase such shares to provide liquidity in the Singleton Revocable Trust.

Mr. Lodovic’s Employment Agreement was amended and restated effective July 1, 2005. Mr. Lodovic is currently entitled to receive cash compensation at an annual rate of $756,000, subject to annual increase of not less than 5%. In addition, Mr. Lodovic is also entitled to receive an annual cash bonus of up to $400,000 for each fiscal year based on a comparison of our actual profits to budgeted profits during such year, as follows: if operating profits for such fiscal year are 100% or more of budget, then the bonus amount payable is $350,000, plus 5% of the excess of operating profits over budget, up to a total of an additional $50,000; if operating profits of such fiscal year are 95% or more (but under 100%) of budget, then the bonus amount payable is $300,000; if operating profits of such fiscal year are 90% or more (but under 95%) of budget, then the bonus amount payable is $250,000; if operating profits of such fiscal year are 85% or more (but under 90%) of budget, then the bonus amount payable is $150,000; if operating profits of such fiscal year are 80% or more (but under 85%) of budget, then the bonus amount payable is $100,000; if operating profits of such fiscal year are under 80% of budget, then no bonus is payable. Discretionary bonuses may be paid in addition to these amounts if approved by Mr. Singleton and/or the Board of Directors. Mr. Lodovic’s Employment Agreement expires on December 31, 2009, but is automatically renewed for successive one-year terms unless either party gives notice terminating the Employment Agreement at least 120 days prior to the expiration of the existing term. Additionally, Mr. Lodovic’s Employment Agreement may be terminated prior to the expiration of the existing term under certain circumstances. Under Mr. Lodovic’s Employment Agreement, he is also eligible to participate in equity ownership and incentive plans established for executive personnel.

Mr. Lodovic is entitled to severance payments if his employment is terminated by the Company without cause or by Mr. Lodovic for good reason (as those terms are defined in his employment agreement). In addition, if the Employment Agreement terminates by expiration at the end of the initial term or any renewal term, Mr. Lodovic is entitled to receive a cash payment equal to his base annual salary in effect immediately prior to termination, plus an amount equal to the maximum annual bonus he is eligible to earn. If there is a change in control, Mr. Lodovic is entitled to receive a cash payment equal to three times the sum of (i) his annual salary in effect at termination, plus (ii) the projected bonus payable to him in respect of the Company’s full fiscal year ending immediately following termination, plus (iii) the deemed annual value of all fringe benefits being made available to him immediately prior to termination. In the event any payment made to or benefit provided to Mr. Lodovic due to termination, the Company shall pay to Mr. Lodovic an additional payment (the “Gross-Up Payment”) in an amount such that after payment by him of all taxes (including federal, state and local income taxes, employment taxes, and any interest or penalties imposed with respect to such taxes), including any taxes imposed upon the Gross-Up Payment, he will retain a net amount of the Gross-Up Payment equal to the excise tax imposed upon the payments. Mr. Lodovic’s Employment Agreement contains a two-year non-compete covenant for all geographical areas in which newspapers are owned or managed by us or our subsidiaries with paid print circulation in excess of 25,000 at the time of termination of the Employment Agreement; provided, however that the ownership of up to 5% of any class of publicly traded securities of any entity shall not be deemed to be a violation. Mr. Lodovic is also party to a Shareholder Agreement with the Company. The Shareholder Agreement entitles Mr. Lodovic, upon termination of his employment following December 31, 2009, by mutual agreement, or as a result of breach by the Company or certain other circumstances, to put to us at a price of 100% of the then fair market value (as determined by formula outlined in the Shareholder Agreement) shares of Class A and B Common Stock which he owns. We also have a call under Mr. Lodovic’s Shareholder Agreement to acquire, and Mr. Lodovic has a right to put, such shares following termination of his employment under other circumstances, at a price equal to a percentage of fair market value (as determined by formula outlined in the Shareholder Agreement), which increases to 100% on December 31, 2009 (at June 30, 2007, Mr. Lodovic is entitled to 85% of the fair market value). As of June 30, 2007, the value of Mr. Lodovic’s put, as calculated per terms of the Shareholder Agreement, was estimated to be $7.3 million and is recorded as a component of “Putable Common Stock” on our balance sheet. In the event of his disability, Mr. Lodovic has the right to require MediaNews to purchase his common stock from time to time during his lifetime in an aggregate amount not to exceed $1.0 million in any fiscal year.

None of our executive officers have an employment agreement with us except Messrs. Singleton and Lodovic.

Salary

Our named executives received salary increases, effective January 1, 2007, as follows: Mr. Singleton 5.0%; Mr. Lodovic 9.9%; Mr. Rossi 1.4% (hired September 5, 2006); Mr. Tierno 3.5%; and Mr. Mayo 9.4%. These increases reflect market adjustments and incremental responsibilities associated with the significant acquisition activity that we had during fiscal year 2007.

Annual Bonus

MBO Plan. Our annual bonus plan (“MBO plan”) is designed to recognize the scope of the executive’s responsibilities, reward attainment of goals set for the year, motivate future superior performance and align the interests of the executive with our objectives. The objectives and the amount of incentive compensation are specific to each individual and are generally based upon a combination of strategic, operational and financial performance objectives. Among the specific objective categories used for 2007 were achieving 1) budgeted Internet advertising and circulation revenues, 2), budgeted operating profits, and 3) budgeted circulation volumes. Also included in the objectives for certain of the named executives were: the integration of the fiscal year 2007 acquisitions, creating a Shared Services Center and implementing cost-cutting programs. Overall, the named executives achieved approximately 50% of their objectives. The bonuses paid under our MBO plan and under the performance-based bonus provisions of the employment agreements of Messrs. Singleton and Lodovic with respect to performance in 2007 are reported in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table below. The potential amounts payable under these programs for 2007 performance are reported in the Grants of Plan-Based Awards table below.

August 2, 2006 Acquisition Bonuses. On August 24, 2006, in connection with the consummation of the acquisition by MediaNews of the Contra Costa Times and the San Jose Mercury News, and the entry by MediaNews into an agreement with The Hearst Corporation (“Hearst”) pursuant to which (i) Hearst agreed to make an equity investment in MediaNews and (ii) MediaNews agreed to purchase The Monterey County Herald and the St. Paul Pioneer Press from Hearst concurrently with the consummation of such equity investment, we awarded bonuses to certain of our officers and employees in the aggregate amount of $1.875 million. The acquisition bonuses paid to our named executive officers are set forth in the Bonus column of the Summary Compensation Table below. The acquisition bonuses reflect the significance of the acquisition for MediaNews, which required significant additional time and effort by the executives in addition to their regular duties.

Other Compensation

Career Restricted Stock Unit Plan (“RSU Plan”). We adopted the RSU Plan in fiscal year 2005 and awarded shares for the first time in fiscal year 2006. The RSU Plan is intended to encourage retention and reward performance of selected senior management over a significant period of time. Our board of directors (or a designated committee) selects the members of senior management who will be granted an award and determines the number of restricted stock units (“RSUs”) to be awarded to them in its sole discretion. Each RSU represents the right to receive one share of our Class B Common Stock (which is non-voting and does not pay dividends, but which is convertible into Class A in certain circumstances), subject to vesting and other requirements. RSUs granted to a participant vest in full upon the later to occur of:

	•		the earlier of (x) the completion of 20 years of continuous service with us or our affiliates or (y) attainment of age 67 while still employed by us or our affiliates; or

	•		the date on which the participant (a) has completed at least five years of participation in the RSU Plan and (b) has a combined age and years of continuous service with us or our affiliates of at least 72.

RSUs vest on a pro rata basis (based on the length of the period in which the award was held compared to the period needed for full vesting) upon certain events, as set forth under “Potential Payments upon Termination.” The market value of the RSUs (as defined in the RSU plan document) is determined by multiplying our most recent twelve month operating profits, adjusted for debt levels, by a public company peer group trading multiple (as such terms are defined in the RSU plan document), and dividing the result by the number of outstanding shares.

Recipients of shares issued pursuant to the RSU Plan have the right to require us to repurchase a number of shares at their then fair market value (as determined by formula outlined in the RSU Plan) that is sufficient to enable them to pay taxes due in connection with such issuance, provided that our Board of Directors may suspend such right at any time. At any time following the six-month anniversary of the date of issuance of shares of such Class B Common Stock, we have the right to

repurchase such shares at their then fair market value (as determined by formula outlined in the RSU Plan). Such repurchase rights will terminate if we consummate an initial public offering of our common stock. Under the terms of our RSU Plan unvested RSUs are forfeited if the executive voluntarily leaves MediaNews.

We are a privately held company and as such do not offer stock options as long-term incentive compensation. The RSU Plan was designed to reward performance and motivate future performance, align the interests of the executive with our shareowners’ and retain the executives for the duration of their careers. The size of RSU grants in 2007 was based upon the strategic, operational and financial performance of the Company overall and reflects the executives’ expected contributions to the Company’s future success. Existing ownership levels were not a factor in award determination. Messrs. Singleton, Lodovic, Tierno and Mayo received grants of RSU awards in 2007 related to fiscal year 2006 performance, in the amounts reported in the Grants of Plan-Based Awards table, below. Mr. Rossi did not receive any RSU awards in fiscal year 2007 as he joined the Company in fiscal year 2007. It is anticipated that all the named executives (other than Mr. Grilly) will receive RSU awards in fiscal year 2008 related to fiscal year 2007 performance, although the timing and amount has not yet been determined.

Supplemental Executive Retirement Plan. We adopted the non-qualified MediaNews Group Supplemental Executive Retirement Plan, or the “SERP,” in fiscal year 2003. This plan has been offered to certain of our eligible corporate executives. The SERP has a deferred compensation component, a supplemental retirement plan component, and a retiree medical component, as described below.

	•		Deferred Compensation. The deferred compensation component allows participants to defer a portion (up to 100%) of their salary and bonuses on a pre-tax basis. There is no company match on these deferrals. Deferred amounts are credited with a return based on notional investment elections made by the individual participants from among a menu of funds offered under the plan. All of the available investment funds are generally available to the investing public. Amounts deferred by the participant are always fully vested. Deferrals are paid out upon termination of employment, and at the election of the participant are paid in the form of a lump sum or installment payments.

	•		Supplemental Retirement. The supplemental retirement component consists of company contributions. These contributions are made solely at the discretion of the Company, but only if our actual profits attain budgeted profit goals for the fiscal year. Company contributions are subject to ratable vesting, generally over ten years from the date of participation in the plan. Earnings on such company contributions to this plan accrue at the same rate of interest as paid on our bank revolving credit facility. These amounts are subject to the same payout election as the elective deferred compensation amounts discussed above. No company contributions were made for fiscal 2007 as we did not attain the budgeted profit goals for the year.

			In addition, prior to the adoption of the SERP plan Mr. Tierno participated in another nonqualified deferred compensation plan we sponsor which is offered to certain of the publishers of our newspapers. The deferrals include a company match, in which Mr. Tierno is fully vested. Deferred amounts are credited with a return based on notional investment elections made by the individual participants from among a menu of funds offered under the plan. All of the available investment funds are generally available to the investing public. Deferrals are paid out upon termination of employment, and at the election of the participant are in the form of a lump sum or installment payment.

	•		Retiree Medical. As a component of the SERP, the MediaNews Group, Inc. Retiree Medical Benefits Plan provides for full health care coverage during retirement for certain of our eligible corporate executives and their spouses. In order to be eligible for benefits under this plan, an executive must have a combined age and years of service of 70, with at least three years of participation in the plan.

Other Compensation. We provide our named executives with other benefits, reflected in the All Other Compensation column in the Summary Compensation Table below, that we believe are reasonable, competitive and consistent with the objectives of the Company’s overall executive compensation program. The costs of these benefits constitute only a small percentage of each named executive’s total compensation and include premiums paid on life insurance and disability insurance policies, relocation and temporary housing reimbursement, tax gross—ups on certain benefits, health care cost reimbursements, and contributions to deferred salary accounts, including the contributions discussed above related to the supplemental retirement and to make up for contribution limitations on employer matching contributions to our 401(k) plan. We also provide certain of the named executives with use of a car leased by the Company or a car allowance, country club dues, and reimbursement of certain child care related expenses.

COMPENSATION TABLES

SUMMARY COMPENSATION TABLE



											Change in
											Pension Value
											and Non-
											Qualified
									Non-Equity		Deferred
							Stock		Incentive Plan		Compensation		All Other
Name and Principal	Fiscal		Salary^(a)		Bonus^(b)		Awards^(c)		Compensation^(d)		Earnings^(e)		Compensation^(f)		Total
Position	Year		($)		($)		($)		($)		($)		($)		($)

W. Dean Singleton, Vice Chairman and CEO		2007		1,061,250		—		309,736		100,000		1,842		180,489		1,653,317
Joseph J. Lodovic, IV President		2007		722,100		1,000,000		190,696		100,000		1,267		105,213		2,119,276
Steven B. Rossi, Executive Vice President and COO		2007		499,585		—		—		120,000		—		68,432		688,017
Anthony F. Tierno, Senior Vice President of Operations		2007		385,149		50,000		302,040		60,000		147		36,401		833,737
Ronald A. Mayo, Vice President and CFO		2007		287,100		225,000		24,733		100,000		449		24,897		662,179
Gerald E. Grilly, former Executive Vice President and COO (*)		2007		104,167		150,000		10,836		—		129		1,499,794		1,764,926

(*) Effective August 31, 2006, Mr. Grilly retired from MediaNews. In connection therewith, Mr. Grilly became entitled to receive severance of $1.25 million payable over three years, and was paid $250,000 in connection with forfeiting his rights under various company benefit plans in which he participated. His fiscal year 2007 compensation would qualify him for inclusion in the compensation table had he still been employed with MediaNews at June 30, 2007.

(a) Includes all salary earned during the fiscal year, including any amounts deferred under our deferred compensation plan and 401(k) plan.

(b) Bonus amounts paid in connection with the August 2, 2006 acquisition previously described.

(c) Reflects the accounting charge recognized during fiscal year 2007 with respect to grants of RSUs made in fiscal years 2007 and 2006. For financial reporting purposes, reflects the value of restricted stock units calculated in accordance with the RSU Plan document on the date of the grant, which amount is expensed over the period the units vest. Fair market value of the RSU grants fluctuates with our performance and the performance of certain of our peers in the newspaper industry.

(d) Performance-based bonus earned under executive employment agreements or under our MBO plan.

(e) Reflects the portion of earnings credited on the company contribution component of our Supplemental Executive Retirement Plan which is deemed to be above market, determined by comparing the rate of return provided under the plan during fiscal year 2007 (LIBOR plus 1.25 basis points during fiscal year 2007) to 120% of the Applicable Federal Long-Term Rate (AFR) during the same period.

(f) All Other Compensation consists of various benefits and perquisites to our named executives as generally described in Compensation Discussion and Analysis. The benefits and perquisites that exceed the disclosure threshold are as follows, by named executive: Mr. Singleton received a total of $141,681 of perquisites comprised of $43,252 of disability insurance premiums, $53,672 in life insurance premiums, $26,062 in country club fees and $18,695 of other perquisites that did not meet the disclosure threshold. Mr. Singleton also received a tax gross-up benefit of $34,008 and $4,800 of other compensation and benefits that did not meet the disclosure threshold. Mr. Lodovic received a total of $72,539 of perquisites comprised of $25,645 in country club fees and $46,894 of other perquisites that did not meet the disclosure threshold. Mr. Lodovic also received other compensation and benefits of $32,674, none of which met the disclosure threshold. Mr. Rossi received a total of $55,443 of perquisites comprised of $32,018 in relocation and temporary housing reimbursement and $23,425 of other perquisites that did not meet the disclosure threshold. Mr. Rossi also received other compensation benefits of $12,989, none of which met the disclosure threshold. Mr. Tierno received a total of $22,256 of perquisites and other compensation and benefits of $14,145, none of which met the disclosure threshold. Mr. Mayo received a total of $16,284 of perquisites and other compensation and benefits of $8,613, none of which met the disclosure threshold. Mr. Grilly received a total of $1,476,000 associated with his severance agreement. He also received $23,204 of perquisites and other compensation and benefits of $590, none of which met the disclosure threshold.

GRANTS OF PLAN-BASED AWARDS – FY 2007

MBO Plan and Performance-Based Bonus Under Employment Agreements



Name	Estimated Future Payouts Under Non-Equity Incentive Plan Awards
	Threshold ($)		Target ($)		Maximum ($)
W. Dean Singleton		100,000		450,000		500,000
Joseph J. Lodovic, IV		100,000		350,000		400,000
Steven B. Rossi		18,750		250,000		250,000
Anthony F. Tierno		15,000		150,000		150,000
Ronald A. Mayo		20,000		100,000		100,000
Gerald E. Grilly		—		—		—

RSU Plan

All Other Stock

Awards:

Grant Date

Number of Shares of

Fair Value of

Name

Grant Date

Stock or Units

Award^(a)

(#)

($)

W. Dean Singleton

August 28, 2006

2,000

484,000

Joseph J. Lodovic, IV

August 28, 2006

1,250

302,500

Steven B. Rossi

—

Anthony F. Tierno

August 28, 2006

450

108,900

Ronald A. Mayo

August 28, 2006

300

72,600

Gerald E. Grilly

—

(a) Reflects full value of award at date of grant, valued in accordance with the RSU Plan document.

These plans are described in the Compensation Discussion and Analysis.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2007



	Stock Awards – RSU Plan
		Number of Shares or		Market Value of Shares
		Units of Stock That		or Units of Stock That
		Have Not Vested		Have Not Vested^(a)
Name		(#)		($)
W. Dean Singleton			3,613		451,625
Joseph J. Lodovic, IV			2,218		277,250
Steven B. Rossi			—		—
Anthony F. Tierno			4,040		505,000
Ronald A. Mayo			515		64,375
Gerald E. Grilly^(b)			—		—

	(a)		All of these awards were granted under our RSU Plan, either in fiscal 2006 or 2007. We are a privately held company and, as such, the amount reported above as year-end market value of RSUs that have not vested was calculated under the valuation formula contained in the RSU plan document.

	(b)		A portion of Mr. Grilly’s RSUs became vested and the rest were forfeited as a result of the termination of his employment.

OPTION EXERCISES AND STOCK VESTED – Fiscal Year 2007

Stock Awards

Name

Number of Shares

Value Realized on

Acquired on Vesting (#)

Vesting ($)

Gerald E. Grilly^(a)

218

73,538

(a)

Reflects the portion of Mr. Grilly’s RSUs that vested upon his termination of employment, as provided under the RSU Plan. The Value Realized on Vesting was calculated as of the measurement date under the plan applicable to his termination of employment using the methodology in the RSU plan document. No other named executives became vested in any RSUs during fiscal 2007.

NONQUALIFIED DEFERRED COMPENSATION – Fiscal Year 2007



	Executive		Registrant		Aggregate		Aggregate			Aggregate
	Contributions in		Contributions in		Earnings in		Withdrawals/			Balance at Last
Name	Last FY^(a)		Last FY^(b)		Last FY^(c)		Distributions			FYE^(d)
	($)		($)		($)		($)			($)
W. Dean Singleton		—		—		10,097		—			147,617
Joseph J. Lodovic, IV		—		14,651		17,734		—			177,862
Steven B. Rossi		—		—		—		—			—
Anthony F. Tierno		58,089		4,953		156,202		—			1,096,348
Ronald A. Mayo		3,049		1,626		14,441		—			115,831
Gerald E. Grilly		6,250		—		13,922		(498,991	)		—

	(a)		All of these amounts are included as salary in the Summary Compensation Table.

	(b)		Includes contributions to the named executives’ salary accounts to make up for contribution limitations on employer 401(K) matching contributions.

	(c)		Includes amounts shown in the Summary Compensation Table in the column labeled “Change in Pension Value and on-Qualified Deferred Compensation Earnings.”

	(d)		Includes the following amounts shown in the Summary Compensation Table: Mr. Singleton $1,842; Mr. Lodovic $1,267; Mr. Tierno $58,236; and Mr. Mayo $3,498.

See Compensation Discussion and Analysis for a description of this plan.

Potential Payments Upon Termination

The employment agreements, RSU Plan, and SERP plan previously discussed have termination and/or change of control provisions that allow for immediate vesting and/or cash payments, as described below and in the Compensation Discussion and Analysis under “Forms of Compensation — Employment and Other Agreements” and quantified below.

Employment Agreements

The provisions of Messrs. Singleton’s and Lodovic’s employment agreements dealing with termination of employment and change of control are summarized in the Compensation Discussion and Analysis.

Career Restricted Stock Unit Plan (“RSU Plan”).

RSUs fully vest upon the occurrence of a “Change in Control” (as defined) and vest pro rata in the event of the participant’s death, disability or termination of employment by us without cause. Pro rata vesting is determined based on the length of time the RSU was held by the participant compared to the length of time it would need to have been held for full vesting (as described in the Compensation Discussion and Analysis). Any RSUs not so vested are forfeited upon the participant’s termination of employment, unless otherwise determined by our Board (or the committee administering the plan) in its sole discretion. Shares of our Class B Common Stock will be issued to holders of vested RSUs upon the earliest of the participant’s termination from service, the participant’s disability and the occurrence of a “Qualified Change in Control” (as defined).

POTENTIAL PAYMENTS UPON TERMINATION⁽¹⁾



			Continuation				Accelerated
			of Medical /				Vesting of
			Welfare		Accelerated		Employer Portion		Death and
	Cash		Benefits		Vesting of		of Deferred		Long-Term				Total
	Severance		(present		Equity		Compensation		Disability		Excise Tax		Termination
	Payment ⁽²⁾		value) ⁽³⁾		Awards ⁽⁴⁾		Award ⁽⁵⁾		Benefits^{(6) & (7)}		Gross-Up		Benefits
	($)		($)		($)		($)		($)		($)		($)
W. Dean Singleton
Voluntary Resignation		—		342,283		—		—		—		—		342,283
Retirement		—		342,283		—		—		—		—		342,283
Death		—		189,047		180,650		—		—		—		369,697
Disability		—		342,283		180,650		—		1,047,568		—		1.570,501
Involuntary or Good Reason Termination		3,926,155		342,283		180,650		—		—		2,407,324		6,856,412
Involuntary or Good Reason Termination, Change of Control		5,022,528		342,283		451,625		—		—		3,079,565		8,896,001
Joseph J. Lodovic, IV
Voluntary Resignation		—		—		—		—		—		—		—
Retirement		—		—		—		—		—		—		—
Death		—		—		110,900		37,958		—		—		148,858
Disability		—		—		110,900		37,958		1,047,568		—		1,196,426
Involuntary or Good Reason Termination		2,845,483		—		110,900		—		—		1,744,709		4,701,092
Involuntary or Good Reason Termination, Change of Control		3,649,440		—		277,250		37,958		—		2,237,656		6,202,304
Steven B. Rossi
Voluntary Resignation		—		—		—		—		—		—		—
Retirement		—		—		—		—		—		—		—
Death		—		—		—		—		—		—		—
Disability		—		—		—		—		1,047,568		—		1,047,568
Involuntary or Good Reason Termination		—		—		—		—		—		—		—
Change of Control		—		—		—		—		—		—		—
Anthony F. Tierno
Voluntary Resignation		—		205,588		—		—		—		—		205,588
Retirement		—		205,588		—		—		—		—		205,588
Death		—		121,530		202,000		—		1,993,064		—		2,316,594
Disability		—		205,588		202,000		—		519,674		—		927,262
Involuntary or Good Reason Termination		—		205,588		202,000		—		—		—		407,588
Change of Control		—		205,588		505,000		—		—		—		710,588
Ronald A. Mayo
Voluntary Resignation		—		—		—		—		—		—		—
Retirement		—		—		—		—		—		—		—
Death		—		—		14,306		17,165		—		—		31,471
Disability		—		—		14,306		17,165		1,047,568		—		1,079,039
Involuntary or Good Reason Termination		—		—		14,306		—		—		—		14,306
Change of Control		—		—		64,375		17,165		—		—		81,540

	(1)		Assumes the executive’s termination in each specified scenario, or the change of control, occurred on June 30, 2007, which is the last day of our fiscal year. The table does not include payments the executive would be entitled to receive under broad-based plans, such as our 401(k) plan. The table does not include the vested portion of the aggregate account balance reported in the Nonqualified Deferred Compensation table above, but does include the portion of such account balance which is subject to accelerated vesting upon the applicable trigger event.

	(2)		Reflects the cash severance payment required by Messrs. Singleton’s and Lodovic’s employment agreements, assuming their employment was terminated on June 30, 2007. We assumed 5% salary increases through the term of the agreements, and that the maximum eligible bonuses would be paid.

Footnotes continued on following page

Footnotes continued from previous page

	(3)		Reflects the vested post-retirement benefits as of June 30, 2007 for the named executives. Only Messrs. Singleton and Tierno are vested in such benefits as of June 30, 2007.

	(4)		Reflects the value of RSUs whose vesting is accelerated on the termination of employment, based on the fair market value (as determined under the RSU Plan) on June 30, 2007. The total payout associated with the RSUs would be the combination of previously vested amounts and the accelerated vesting shown in the table above.

	(5)		Reflects the value of the employer portion of deferred compensation awards whose vesting is accelerated on the termination of employment, based on the fair market value on June 30, 2007. The total payout associated with the deferred compensation balances would be the combination of employee deferrals and earnings thereon (always 100% vested), previously vested employer contribution amounts and earnings thereon, and the accelerated vesting shown in the table above.

	(6)		We offer long-term disability benefits to certain of our executive officers, including the named executives. The estimated benefits presented above (calculated as of June 30, 2007) represent the present value the long-term disability payments over the shorter of the length of time until the named executive becomes eligible for social security benefits or the actuarially determined expected length of long-term disability.

	(7)		We have split dollar life insurance policies on behalf of Mr. Tierno. Upon Mr. Tierno’s death, we would receive $872,980 in proceeds, and Mr. Tierno’s estate would receive a payment of $1,993,064.

Board of Directors — Compensation

None of our directors is compensated for serving on our Board of Directors. However, see Item 13: Certain Relationships and Related Transactions for further discussion regarding Mr. Richard Scudder’s consulting agreement and Mr. Howell Begle’s position as Of Counsel to Hughes Hubbard & Reed LLP.

Compensation Committee Interlocks and Insider Participation

As noted previously, the Board of Directors does not have a compensation committee. See discussion under Compensation Discussion and Analysis.

Compensation Committee Report

We are a private company and as such do not have a compensation committee of the Board of Directors. William Dean Singleton, our Vice Chairman and Chief Executive Officer, performs the functions of a compensation committee of the Board of Directors, and has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review and discussions, has recommended that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K.

By the members of the Board of Directors performing the functions of a compensation committee,

William Dean Singleton, Vice Chairman and Chief Executive Officer

Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

As of June 30, 2007, the authorized capital stock of MediaNews consists of 3,000,000 shares of Class A Common Stock, $0.001 par value, 2,314,346 shares of which are issued of which 2,298,346 are outstanding and 16,000 are held in treasury and 150,000 shares of Class B Common Stock, $0.001 par value, none of which are issued or outstanding at June 30, 2007. We have not declared or paid any cash dividends on our common stock in the past. Our current long-term debt agreements place limits on our ability to pay dividends. In conjunction with the consummation of the Hearst equity investment in us, we anticipate paying a dividend to the Class A Shareholders of up to $25.0 million. On July 13, 2007, we repurchased 21,500 shares of Class A Common Stock held by Ms. Difani as trustee and/or custodian for certain of her children; therefore, currently 2,276,846 Class A Common Stock shares are outstanding and 37,500 are held in treasury.

The following table sets forth the number and percentage of shares of our common stock currently issued and outstanding and beneficially owned by (i) each person known to us to be the beneficial owner of more than 5.0% of any class of our equity securities; (ii) each named executive officer as defined in Item 402(a)(3) of Regulation S-K; and (iii) all directors and executive officers of MediaNews as a group as of September 27, 2007.



	Amount and Nature of		Percentage of
	Beneficial Ownership(a)		Ownership of
	Class A Common Stock		Class A Common Stock
William Dean Singleton(b),(c),(l),(m)		254,858.9900		11.19	%
Howell E. Begle, Jr.(b),(d),(l),(m)		786,426.5100		34.54	%
Patricia Robinson(b),(e),(l),(m)		786,426.5100		34.54	%
Joseph J. Lodovic, IV(b),(f)		58,199.0000		2.56	%
Jean L. Scudder(g),(k)		384,065.1200		16.87	%
Charles Scudder(h),(k)		260,321.3750		11.43	%
Elizabeth H. Difani(h),(i),(k)		197,573.4575		8.68	%
Carolyn Miller(h),(j),(k)		177,825.5475		7.81	%
All directors and executives as a group(n)		2,119,270.0000		93.08	%

(a)		Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. Except as indicated by footnote, the persons named in the table have sole voting and investment power with respect to all shares of capital stock indicated as beneficially owned by them.

(b)		The address of each such person is: c/o Mr. Howell E. Begle, Jr., Trustee, 1775 I Street N.W., Suite 600, Washington, D.C. 20006.

(c)		These shares are held by a revocable trust for the benefit of the children of Mr. Singleton (the “Singleton Revocable Trust”), for which trust Mr. Begle and Mr. Singleton are trustees.

(d)		Includes all shares for which Mr. Begle has sole voting power under the Singleton Family Voting Trust Agreement for MediaNews (the “Singleton Family Voting Trust Agreement for MediaNews”) and shared investment power, as a trustee for an irrevocable trust for the benefit of Mr. Singleton’s children (the “Singleton Irrevocable Trust”). Also includes all shares of common stock held by the Singleton Revocable Trust for which Mr. Begle is a trustee.

(e)		These shares are held by the Singleton Irrevocable Trust for which Ms. Robinson serves as a trustee and as to which she has shared investment power. Ms. Robinson is Mr. Singleton’s sister.

(f)		Legal ownership of 50% of such shares is held by the Singleton Family Voting Trust. Legal ownership of the remaining 50% of such shares is held by the Scudder Family Voting Trust.

(g)		Includes 123,743.745 shares of common stock held by a trust for the benefit of two of Ms. Scudder’s nephews, for which trust Ms. Scudder serves as the sole trustee. Also includes 74,504 shares of common stock held for the benefit of Ms. Scudder’s son, Benjamin Fulmer, and daughter, Nina Fulmer, for which Ms. Scudder also serves as the sole trustee. Does not include the shares held by Charles Scudder, Elizabeth Difani, as trustee and/or custodian for certain of her children, or Carolyn Miller, as trustee and/or custodian for certain of her minor children, with respect to which Ms. Scudder has sole voting power pursuant to the Scudder Family Voting Trust Agreement for MediaNews (the “Scudder Family Voting Trust Agreement”). Charles Scudder, Elizabeth Difani and Carolyn Miller are siblings of Ms. Scudder; all four are the children of Mr. Richard B. Scudder.

(h)		Sole voting power with respect to these shares is held by Ms. Scudder pursuant to the Scudder Family Voting Trust Agreement. See note (g) above.

(i)		Ms. Difani held 132,299.6658 shares as trustee and/or custodian for certain of her children. Sole voting power with respect to all 219,073.4575 shares was held by Ms. Scudder pursuant to the Scudder Family Voting Trust Agreement. See note (g) above. After the July 13, 2007 repurchase of 21,500 shares held by Ms. Difani, Ms. Difani holds 110,799.6658 shares as trustee and/or custodian for certain of her children, and sole voting power with respect to 197,573.4575 shares is held by Ms. Scudder.

(j)		Ms. Miller holds 118,550.365 shares as trustee for certain of her children. Sole voting power with respect to all 177,825.5475 shares is held by Ms. Scudder pursuant to the Scudder Family Voting Trust Agreement. See note (g) above.

(k)		The address of each person is: c/o Jean L. Scudder, 193 Old Kents Hill Road, Readfield, Maine 04355.

(l)		Indicates shared voting power.

(m)		Indicates shared investment power.

(n)		No directors or officers of MediaNews beneficially own any shares in MediaNews at June 30, 2007 except Mr. Singleton, Ms. Scudder, Mr. Begle, Ms. Robinson and Mr. Lodovic.

Scudder Family Voting Trust Agreement for MediaNews

The children of Richard B. Scudder, which includes Charles A. Scudder, Carolyn S. Miller, Elizabeth H. Difani and Jean L. Scudder, respectively, and Joseph J. Lodovic, IV have entered into the Scudder Family Voting Trust Agreement for MediaNews (the “Scudder Family Voting Trust”) in accordance with which all shares of our common stock held by Charles Scudder, Carolyn Miller, Elizabeth H. Difani, Jean L. Scudder and 50% of those shares held by Joseph J. Lodovic, IV, were transferred to the Scudder Family Voting Trust for MediaNews. Under the Scudder Family Voting Trust for MediaNews, Jean L. Scudder (the “Scudder Trustee”) exercises all voting rights (subject to the consent of shareholders holding 50% of the common stock held by the Scudder Family Voting Trust for MediaNews on such matters as election of directors, mergers, dissolution or reorganization of MediaNews, sale, exchange or pledge of all or substantially all of the assets of MediaNews and acquisition or divestiture by MediaNews of any newspaper venture) and substantially all other rights to which such shareholders would otherwise be entitled until January 31, 2010, subject to extension by written agreement of one or more beneficiaries of the Scudder Family Voting Trust Agreement for MediaNews and the Scudder Trustee.

Singleton Family Voting Trust Agreement for MediaNews

The Singleton Irrevocable Trust, the Singleton Revocable Trust and Joseph J. Lodovic, IV have entered into the Singleton Family Voting Trust Agreement for MediaNews (the “Singleton Family Voting Trust Agreement for MediaNews”) in accordance with which all shares of our common stock held by the Singleton Irrevocable Trust and the remaining 50% of those shares held by Joseph J. Lodovic, IV were transferred to the Singleton Family Voting Trust for MediaNews and the shares of our common stock held by the Singleton Revocable Trust will be transferred to the Singleton Family Voting Trust for MediaNews upon the death or incapacity of Mr. Singleton. Under the Singleton Family Voting Trust Agreement for MediaNews, the Singleton Trustees exercise all voting and substantially all other rights to which such shareholders would otherwise be entitled until January 31, 2010, subject to extension by written agreement of one or more beneficiaries of the Singleton Family Voting Trust Agreement for MediaNews.

MediaNews Shareholders’ Agreement

The Singleton Revocable Trust, the Singleton Irrevocable Trust, the Singleton Family Voting Trust for MediaNews, the Scudder Family Voting Trust for MediaNews, certain of the beneficiaries of such trusts, Joseph J. Lodovic, IV and MediaNews entered into a Shareholders’ Agreement (the “MediaNews Shareholders’ Agreement”) which provides, among other things, that action by the Board of Directors with respect to such matters as the issuance of capital stock, declaration of dividends, redemption of capital stock, certain capital expenditures, mergers or consolidation, and incurring certain indebtedness requires the unanimous approval of all Directors then serving on the Board of Directors or approval by the holders of 75% of the shares of Class A Common Stock entitled to vote on such matters.

The MediaNews Shareholders’ Agreement also provides that until the earlier of (i) the date on which none of our 6 7/8% Senior Subordinated Notes due October 1, 2013, and our 6 3/8% Senior Subordinated Notes due April 1, 2014 are outstanding, or (ii) when MediaNews’ Leverage Ratio (as defined in the indenture relating to our 6 3/8% Senior Subordinated Notes) is less than 3:1, no shareholder may sell, transfer, pledge or otherwise encumber their shares or their interest in their shares, of our common stock to any third party (except to the Company and certain permitted transfers to family members and other shareholders), without the consent of all our shareholders or unless all shares of common stock then outstanding are sold in a single transaction or a contemplated sale to a third party. If any shareholder desires to sell or transfer his shares to us or the other shareholders without an identified third party buyer, then such shareholder may offer to sell his shares to us at fair market value determined by appraisal, or if we decline to purchase such shares, such shareholder may offer to sell his shares to the remaining shareholders at fair market value.

Equity Compensation Plan Information

As of June 30, 2007, the number of shares of our Class B Common Stock to be issued upon exercise of securities issued under our Career RSU Plan (which is our only equity compensation plan) and the number of shares reserved for future issuance thereunder was as follows:

(a)

(b)

(c)

Number of securities remaining

Number of securities to

Weighted-average

available for the future issuance

be issued upon exercise

exercise price of

under equity compensation

of outstanding options,

outstanding options,

plans (excluding securities re-

Plan Category

warrants and rights

flected in column (a))

Equity compensation plans approved by security holders

- 0 -

137,581

Equity compensation plans not approved by security holders

- 0 -

Item 13: Certain Relationships and Related Transactions, and Director Independence

Director Independence

There are no independent directors on our Board. As we are a privately-held company, we are not required to have independent directors on our Board. Our Board of Directors currently consists of four members: two members of the Scudder family, William Dean Singleton, our Chief Executive Officer, and Howell E. Begle, Jr., Of Counsel to Hughes Hubbard & Reed, LLP, which law firm is our counsel. The Board does not have a separate audit committee. No member of the Board has been elected, or is anticipated to be elected, to represent the interests of our creditors.

Certain Relationships and Related Transactions

We are a party to a consulting agreement, renewable annually, with Mr. Richard Scudder, Chairman of the Board and a director of the Company, which agreement requires us to make annual payments of $300,000. In connection with his consulting services, Mr. Scudder participates in our medical plans at no cost to him and we provide Mr. Scudder with the use of a car, which is also used for personal purposes. The cost to us for providing this car during the last fiscal year and currently has been the cost of insurance and maintenance. We also pay the compensation for an administrative assistant for Mr. Scudder.

Our operating partnerships (and joint venture) provide for management fees to be paid to the controlling (or managing) partner. The following is a summary of the management fees paid to us by the partnerships (and joint venture) that we control and manage:

	•		California Newspapers Partnership – the management agreement provides for annual management fees of $5.4 million, subject to annual adjustments based on actual costs and the operating performance of CNP;

	•		Texas-New Mexico Newspapers Partnership provides annual management fees of $75,000, subject to annual adjustments; and

	•		Connecticut Newspapers – the management agreement provides management fees of $792,000 annually, subject to annual adjustments.

MediaNews uses Hughes Hubbard & Reed LLP as one of its legal counsel. Mr. Howell Begle, Jr., who is general counsel and a board member of MediaNews, is Of Counsel to Hughes Hubbard & Reed LLP.

MediaNews is party to a management agreement with Fairbanks Daily News Miner, Inc. (“Fairbanks”) whereby we are paid an annual management fee of $62,400 by Fairbanks. In exchange for the fee, we provide some accounting and financial management to Fairbanks, as well as allow Fairbanks to participate in our risk management programs and employee benefit plans at cost, for which they reimburse us. At June 30, 2007 and 2006, respectively, the Company had $32,000 and $22,000 recorded in other accounts receivable for amounts due from Fairbanks. The majority of the directors and executive officers of MediaNews are directors and officers of Fairbanks. Fairbanks is owned 50% by the Scudder Family 1992 Trust, A Voting Trust, of which the beneficiaries are certain family members related to Mr. Richard Scudder, the Chairman of our board of directors, and 50% by the Singleton Irrevocable Trust, for whom the beneficiaries are the children of Mr. William Dean Singleton, the Vice Chairman and Chief Executive Officer of MediaNews.

Ms. Patricia Robinson, Secretary of MediaNews, is the sister of Mr. William Dean Singleton, Vice Chairman and Chief Executive Officer of the Company. In fiscal year 2007, Ms. Robinson’s total compensation was $128,873.

From 1996 through July 2002, the Company advanced to the Singleton Irrevocable Trust funds to pay the premiums on cash surrender value life insurance policies covering Mr. William Dean Singleton, the Vice Chairman of the Board and Chief Executive Officer of MediaNews, and his wife. The cash surrender value life insurance policies were originally purchased in order to mitigate the impact of estate taxes that may be due on MediaNews stock held in the Singleton Revocable Trust, which benefits Mr. Singleton’s children. The amount advanced as of June 30, 2007 and 2006 was $1.5 million. Advances will be repaid when the policy is surrendered or earlier at Mr. Singleton’s option. No interest is charged on these advances.

Approval of Transactions with Related Persons. Our senior credit facility and our note indentures contain restrictions on transactions with related persons, and generally require that any new transactions be at least as advantageous to us as we would obtain in a transaction with an unrelated person. Our Corporate Governance and Code of Ethics policy is required to be signed by all officers and requires disclosures of any conflicts of interest. The policy requires any transactions which represent a conflict of interest be reported to the Chief Financial Officer and Corporate Secretary immediately. Other than these contractual agreements and our described policy, we have no written policies or procedures for the review, approval or ratification of transactions with related persons. Any such transactions would be approved by our Vice Chairman and Chief Executive Officer, William Dean Singleton, our President, Joseph J. Lodovic, IV, or by our Board of Directors.

Item 14: Principal Accountant Fees and Services

The following table presents fees incurred for services provided by Ernst & Young LLP.

All audit and non-audit services for which we engaged the independent auditor to perform and were required to be pre-approved were pre-approved by our Board of Directors, which acts as our audit committee. The Board of Directors considers, among other things, the possible effect of the performance of such services on the auditor’s independence in order to ensure that the provision of such services does not impair the auditors’ independence.


	Years Ended June 30,
	2007		2006
	(Dollars in thousands)
Audit Fees^(a)	$	1,438	$	618
Audit-Related Fees^(b)		23		20

Total^(c)	$	1,461	$	638

(a)		Fees for professional services rendered by the auditors for the audit of our annual financial statements and the review of our quarterly financial statements included in the Company’s filings with the Securities Exchange Commission. For fiscal year 2007, the amount includes approximately $658,000 attributable to the audit of historical acquiree financial statements required under Rule 3-05 of Regulation S-X of the Securities and Exchange Commission.

(b)		Fees for professional services which principally include services in connection with due diligence and consultation related to mergers and acquisitions, internal control reviews, attest services not required by statute or regulation, and consultation concerning financial accounting and reporting standards.

(c)		There were no tax or other fees paid to Ernst & Young LLP in either year.

AVAILABLE INFORMATION

MediaNews consummated exchange offers for its 6 7/8% Senior Subordinated Notes due 2013 and its 6 3/8% Senior Subordinated Notes due 2014 in April 2004. Because the exchange offers were registered under the Securities Act of 1933, MediaNews became subject to the reporting requirements of the Securities Exchange Act of 1934 upon effectiveness of the registration statements for the exchange offers. Our duty to file reports with the Commission has been suspended in respect of our fiscal year commencing July 1, 2007 pursuant to Section 15(d) of the Securities Exchange Act of 1934. However, the indentures governing our Senior Subordinated Notes require that we continue to file quarterly, annual and, if applicable, current reports on Form 8-K, with the Commission on a voluntary basis.

You can inspect and copy our annual, quarterly and current reports and other information filed with or furnished to the Commission at the public reference facilities of the Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You can also obtain copies of these materials from the public reference section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Please call the Commission at 1-800-SEC-0330 for further information on the public reference rooms. The Commission also maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission (http://www.sec.gov).

Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our Internet site www.medianewsgroup.com as soon as reasonably practicable after we electronically file the material with, or furnish it to, the Securities and Exchange Commission. The information on our Web site is not incorporated by reference to, or as part of, this Report on Form 10-K.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
MediaNews Group, Inc.

We have audited the accompanying consolidated balance sheets of MediaNews Group, Inc. and subsidiaries as of June 30, 2007 and 2006, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the three years in the period ended June 30, 2007. Our audits also included the financial statement schedule listed in the accompanying index to consolidated financial statements. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of MediaNews Group, Inc. and subsidiaries at June 30, 2007 and 2006, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 2007, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Notes 2 and 8 to the consolidated financial statements, effective June 30, 2007, the Company adopted Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R).


		/s/ ERNST & YOUNG LLP

		Ernst & Young LLP

September 27, 2007
Denver, Colorado

MEDIANEWS GROUP, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	June 30,
	2007			2006
	(Dollars in thousands)

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	9,085		$	424
Trade accounts receivable, less allowance for doubtful accounts of $13,800 and $9,282, at June 30, 2007 and 2006, respectively		159,037			93,705
Other receivables		15,899			12,327
Inventories of newsprint and supplies		22,781			21,289
Prepaid expenses and other assets		23,743			11,954
Income taxes receivable		8,925			—

TOTAL CURRENT ASSETS		239,470			139,699

PROPERTY, PLANT AND EQUIPMENT
Land		73,983			41,871
Buildings and improvements		205,035			131,336
Machinery and equipment		501,846			397,949
Construction in progress		11,942			57,657

TOTAL PROPERTY, PLANT AND EQUIPMENT		792,806			628,813
Less accumulated depreciation and amortization		(272,773	)		(249,588	)

NET PROPERTY, PLANT AND EQUIPMENT		520,033			379,225

OTHER ASSETS
Investment in unconsolidated JOAs (Denver and Salt Lake City)		253,613			228,925
Equity investments		48,141			54,457
Subscriber accounts, less accumulated amortization of $173,232 and $161,776 at June 30, 2007 and 2006, respectively		68,395			39,365
Excess of cost over fair value of net assets acquired		842,353			424,161
Newspaper mastheads		380,669			101,829
Advertiser lists, covenants not to compete and other identifiable intangible assets, less accumulated amortization of $52,611 and $34,506 at June 30, 2007 and 2006, respectively		192,211			15,656
Other		50,424			56,249

TOTAL OTHER ASSETS		1,835,806			920,642

TOTAL ASSETS	$	2,595,309		$	1,439,566

See notes to consolidated financial statements

MEDIANEWS GROUP, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	June 30,
	2007			2006

	(Dollars in thousands, except share data)

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable	$	70,152		$	19,526
Accrued employee compensation		49,782			33,299
Accrued interest		18,322			11,690
Other accrued liabilities		60,852			19,486
Unearned income		55,921			31,715
Income taxes payable		—			4,193
Current portion of long-term debt and obligations under capital leases		17,588			4,133

TOTAL CURRENT LIABILITIES		272,617			124,042

OBLIGATIONS UNDER CAPITAL LEASES		5,518			5,763

LONG-TERM DEBT		1,101,527			857,997

DEFINED BENEFIT AND OTHER POST EMPLOYMENT BENEFIT PLAN LIABILITIES		33,342			23,704

OTHER LIABILITIES		25,509			16,853

DEFERRED INCOME TAXES, NET		119,890			103,349

MINORITY INTEREST		606,052			207,439

PUTABLE COMMON STOCK		33,165			40,899

ST. PAUL, MONTEREY AND TORRANCE PURCHASE PRICE (HEARST)		306,525			—

SHAREHOLDERS’ EQUITY
Common stock, par value $0.001; 3,150,000 shares authorized: 2,314,346 shares issued and 2,298,346 shares outstanding		2			2
Additional paid-in capital		—			—
Accumulated other comprehensive loss, net of taxes:
Unrealized loss on hedging		(420	)		(1,588	)
Pension and other post-employment benefit liabilities		(16,921	)		(19,932	)
Retained earnings		110,503			83,038
Common stock in treasury, at cost, 16,000 shares		(2,000	)		(2,000	)

TOTAL SHAREHOLDERS’ EQUITY		91,164			59,520


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,595,309		$	1,439,566

See notes to consolidated financial statements

MEDIANEWS GROUP, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


						Accumulated
			Additional			Other						Common			Total
	Common		Paid-In			Comprehensive			Retained			Stock in			Shareholders’
	Stock		Capital			Loss			Earnings			Treasury			Equity
	(Dollars in thousands)
BALANCE AT JUNE 30, 2004	$	2	$	3,631		$	(19,976	)	$	79,349		$	(2,000	)	$	61,006
Adjustment for putable common stock		—		(3,631	)		—			(44,925	)		—			(48,556	)
Comprehensive income:
Unrealized loss on hedging activities, net of tax benefit of $426		—		—			(697	)		—			—			(697	)
Unrealized loss on hedging activities, reclassified to earnings, net of tax benefit of $348		—		—			456			—			—			456
Minimum pension liability adjustment, net of tax benefit of $10,168		—		—			(13,596	)		—			—			(13,596	)
Net income		—		—			—			39,880			—			39,880

Comprehensive income																(26,043	)

BALANCE AT JUNE 30, 2005		2		—			(33,813	)		74,304			(2,000	)		38,493
Adjustment for putable common stock		—		—			—			7,657			—			7,657
Comprehensive income:
Unrealized gain on hedging activities, net of tax benefit of $153		—		—			286			—			—			286
Unrealized loss on hedging activities, reclassified to earnings, net of tax benefit of $348		—		—			456			—			—			456
Minimum pension liability adjustment, net of tax expense of $9,310		—		—			11,551			—			—			11,551
Net income		—		—			—			1,077			—			1,077

Comprehensive income																13,370

BALANCE AT JUNE 30, 2006		2		—			(21,520	)		83,038			(2,000	)		59,520
Adjustment for putable common stock		—		—						7,734			—			7,734
Accretion related to St. Paul, Monterey and Torrance Purchase Price		—		—			—			(15,911	)		—			(15,911	)
Pension and postretirement adjustment related to adoption of SFAS No. 158, net of tax benefit of $1,136		—		—			(1,634	)		—			—			(1,634	)
Comprehensive income:
Unrealized gain on hedging activities, net of tax benefit of $474		—		—			712			—			—			712
Unrealized loss on hedging activities, reclassified to earnings, net of tax benefit of $348		—		—			456			—			—			456
Pension adjustment, net of tax expense of $3,228		—		—			4,645									4,645
Net income		—		—			—			35,642			—			35,642

Comprehensive income		—		—			—			—			—			41,455

BALANCE AT JUNE 30, 2007	$	2	$	—		$	(17,341	)	$	110,503		$	(2,000	)	$	91,164

See notes to consolidated financial statements

MEDIANEWS GROUP, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended June 30,
	2007			2006			2005
	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	35,642		$	1,077		$	39,880
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		36,549			43,248			25,834
Amortization		35,750			20,901			18,953
Loss on early extinguishment of debt		—			—			9,236
Net loss (gain) on sale of assets and newspaper transactions		(66,156	)		(1,097	)		437
Provision for losses on accounts receivable		12,091			9,893			8,065
Amortization of debt discount		819			935			1,051
Minority interest		59,557			35,033			29,334
Distributions of net income paid to minority interest		(57,851	)		(35,033	)		(28,167	)
Proportionate share of net income from unconsolidated JOAs		(39,535	)		(44,120	)		(71,878	)
Distributions of net income from unconsolidated JOAs^(a)		39,535			44,120			71,878
Equity investment (income) loss, net		734			(5,898	)		(10,201	)
Distributions of net income from equity investments^(b)		1,723			5,228			9,511
Deferred income tax expense (benefit)		26,230			(4,545	)		17,728
Change in defined benefit plan liabilities, net of cash contributions		(4,205	)		2,427			1,463
Change in estimated option repurchase price		(6,607	)		500			(5,306	)
Unrealized loss on hedging activities, reclassified to earnings from accumulated other comprehensive loss		456			456			804
Change in operating assets and liabilities:
Accounts receivable		(15,145	)		(18,564	)		(13,356	)
Inventories		9,821			4,026			(7,632	)
Prepaid expenses and other assets		(4,921	)		4,599			(4,301	)
Accounts payable and accrued liabilities		66,799			10,406			6,374
Unearned income		5,381			2,881			173
Change in other assets and liabilities, net		8,197			784			(6,936	)

NET CASH FLOWS FROM OPERATING ACTIVITIES		144,864			77,257			92,944

CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Detroit and other investments, net of return of capital		773			(43,991	)		(250	)
Proceeds from the sale of newspapers and other assets		58,195			746			483
Business acquisitions, net of cash acquired		(452,540	)		(3,110	)		(58,607	)
Cash contributed by partners for business acquisitions		21,085			—			—
Business dispositions		14,000			—			—
Distributions in excess of net income from JOAs^(a)		25,635			28,148			15,531
Distributions in excess of net income from equity investments^(b)		3,015			1,254			1,486
Capital expenditures		(31,636	)		(47,501	)		(51,312	)

NET CASH FLOWS FROM INVESTING ACTIVITIES		(361,473	)		(64,454	)		(92,669	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt, net of issuance costs		495,653			66,350			464,250
Reduction of long-term debt and other liabilities		(245,092	)		(77,242	)		(516,375	)
Distributions in excess of net income to minority interests		(25,291	)		(5,749	)		—
Repurchase premiums and related costs associated with long-term debt		—			—			(8,624	)

NET CASH FLOWS FROM FINANCING ACTIVITIES		225,270			(16,641	)		(60,749	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		8,661			(3,838	)		(60,474	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		424			4,262			64,736

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	9,085		$	424		$	4,262


(a) Total distributions from unconsolidated JOAs were $65.2 million, $72.3 million and $87.4 million for fiscal years 2007, 2006 and 2005, respectively.
(b) Total distributions from equity investments were $4.7 million, $6.5 million and $11.0 million for fiscal years 2007, 2006 and 2005, respectively. Supplemental schedule of noncash investing activities:
Business acquisitions (St. Paul, Monterey and Torrance)	$	(290,614	)	$	—		$	—
Business partners’ share of acquisitions (San Jose and Contra Costa)	$	(340,120	)		—			—
Investment in Salt Lake Newspaper Production Facilities, LLC	$	(45,469	)		—			—
Danbury transaction	$	(81,596	)		—			—

See notes to consolidated financial statements

MEDIANEWS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Basis of Presentation

MediaNews Group, Inc. (“MediaNews” or the “Company”), through its subsidiaries, publishes daily and non-daily newspapers serving markets in twelve states. The Company also owns four radio stations and one television station; the combined revenues of these non-newspaper operations comprise less than 1.0% of the Company’s consolidated revenue and are not considered significant to the Company’s operations.

Note 2: Significant Accounting Policies and Other Matters

Significant accounting policies for the Company involve its assessment of the recoverability of its long-lived assets, including goodwill and other intangible assets, which is based on such factors as estimated future cash flows and current fair value estimates. The Company’s accounting for pension and retiree medical benefits requires the use of estimates concerning the work force, interest rates, plan investment return and involves the use of advice from consulting actuaries. The workers’ compensation obligation involves estimating ultimate claims payouts for open claims and involves the use of advice and analysis of actuaries. The Company’s accounting for federal and state income taxes is sensitive to interpretation of various laws and regulations and assumptions on the realization of deferred tax assets.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles at times requires the use of estimates and assumptions. The Company uses estimates, based on historical experience, actuarial studies and other assumptions, as appropriate, to assess the carrying values of its assets and liabilities and disclosure of contingent matters. The Company re-evaluates its estimates on an ongoing basis. Actual results could differ from these estimates.

Principles of Consolidation

All significant intercompany accounts have been eliminated.

Revisions/Reclassifications

For comparability, certain prior year balances have been reclassified to conform to current reporting classifications. In particular, the statement of cash flows has been revised for the year ended June 30, 2006 to reflect distributions in excess of net income paid to minority interests in accordance with Statement of Financial Standards (“SFAS”) No. 95, Statement of Cash Flows. For the year ended June 30, 2006, the revision increased the reported net cash flows from operating activities and decreased the reported net cash flows from financing activities by $5.7 million. There was no impact to the statement of cash flow 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 newspaper party to a joint operating agreement continue to be separate and outside of a JOA. As of June 30, 2007, the Company, through its partnerships and subsidiaries, participated in JOAs in Denver, Colorado, Salt Lake City, Utah, York, Pennsylvania, Detroit, Michigan and Charleston, West Virginia.

The operating results from the Company’s unconsolidated JOAs (Denver and Salt Lake City) 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, 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 consolidated subsidiaries directly attributable to the JOAs providing editorial content and news for the Company’s newspapers party to the JOAs.

The Company’s investments in the Denver and Salt Lake City JOAs are included in the consolidated balance sheet under the line item “Investment in Unconsolidated JOAs.” See Note 3: Joint Operating Agencies for additional discussion of our accounting for each JOA operation in which the Company participates.

Because of the structure of the Detroit partnership and the Company’s ownership interest therein, the Company’s accounting for its investment in the Detroit JOA only includes the preferred distributions the Company receives from the Detroit JOA. The Company’s investment in The Detroit News, Inc. is included in other long-term assets.

Under the Charleston JOA, the Company is reimbursed for the cost of providing the news and editorial content of the Charleston Daily Mail and is paid a management fee. The Company’s limited partnership interest in the Charleston JOA does not entitle the Company to any share of the profits or losses of the limited partnership.

The Company owns all of the York JOA and accordingly, consolidates its results. The York Dispatch (one of the newspapers in the JOA) is edited by a third party, and the Company reimburses the third party for all related expenses and pays them a management fee. These expenses are included in the Company’s consolidated results.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Trade Accounts Receivable

Trade accounts receivable are generally from advertisers, commercial printing customers, single copy newspaper outlets, newspaper subscribers and independent newspaper delivery contractors. The Company extends unsecured credit to most of its customers. Credit limits, setting and maintaining credit standards and managing the overall quality of the credit portfolio is largely decentralized (maintained and managed at the individual newspaper locations). The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The allowance for doubtful accounts is based on both the aging of accounts receivable at period end and specific identification.

Inventories

Inventories, which largely consist of newsprint, are valued at the lower of cost or market. Cost is generally determined using the first-in, first-out method.

Investments

The Company has made the following strategic investments, which are accounted for under the equity method (for those investments in which the Company has less than 20% ownership, the Company accounts for these under the equity method as the Company has seats on the board and, therefore, has significant influence and ties to the entity beyond the Company’s invested capital):

	•		Prairie Mountain Publishing Company, partnership that publishes the former Eastern Colorado Publishing Company newspapers (comprised of several small daily and weekly newspapers) and the Daily Camera and Colorado Daily, both published in Boulder, Colorado (50% ownership interest).

	•		CIPS Marketing Group, Inc., a total market coverage delivery service in Los Angeles (50% ownership interest),

	•		Gallup Independent Company, publisher of the Gallup Independent in Gallup, New Mexico (approximately 38% ownership interest),

	•		Ponderay Newsprint Company, a minority investment in a newsprint mill held by the Company’s subsidiary, Kearns-Tribune, LLC (6.0% ownership interest and one seat on the board).

	•		Texas-New Mexico Newspapers Partnership through December 25, 2005, which was formed on March 3, 2003 (the Company held a minority interest of 33.8% through December 25, 2005). Effective December 26, 2005, as a result of contributions to the partnership and an amendment and restatement of the partnership agreement, the Company owns 59.4% of the partnership and consolidates its results after such date. See Note 4: Investments in California Newspapers Partnership and Texas-New Mexico Newspapers Partnership for further discussion.

	•		Hometown Values, acquired in July 2005, advertising coupon magazine for small local businesses mailed to 18 different targeted community zones along the Wasatch front in Utah (50% ownership interest).

These investments are included in the consolidated balance sheet as a component of long-term assets under the caption “equity investments.”

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Buildings and machinery and equipment are depreciated using the straight-line method over the expected useful lives of individual assets. Buildings and improvements are depreciated over the lesser of 40 years or the term of the lease and machinery and equipment is depreciated over 3 to 20 years.

Goodwill and Other Intangible Assets and Impairment Testing

The Company accounts for goodwill and other intangible assets under Statement of Financial Standards No. 142 (“SFAS No. 142”), Goodwill and Other Intangible Assets. Under the standard, excess of cost over fair value of net assets acquired (goodwill) and other indefinite life intangibles (primarily mastheads) are not amortized, but instead are periodically reviewed for impairment. All other intangibles with a finite useful life continue to be amortized over their estimated useful lives. Subscriber accounts and advertiser lists are amortized using the straight-line method over periods ranging from 8 to 15 years with a weighted average remaining life based on the date of acquisitions of approximately 5 and 10 years, respectively. Other finite lived intangibles are being amortized over periods not exceeding 15 years.

In addition, as required by SFAS No. 142, the Company performed an annual impairment test for goodwill and mastheads as of July 1, 2007. There was no impairment of intangible assets noted as a result of these tests. Another impairment test will be performed July 1, 2008, unless unexpected events or circumstances arise that require the Company to test for impairment sooner.

Estimated amortization expense for the next five years is as follows at June 30, 2007 (in thousands):


2008	$	32,467
2009		27,386
2010		24,090
2011		23,629
2012		22,933

SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The carrying value of long-lived assets is reviewed annually. If, at any time, the facts or circumstances at any of the Company’s individual newspaper or other operations indicate the impairment of long-lived asset values as a result of a continual decline in performance or as a result of fundamental changes

in a market, a determination is made as to whether the carrying value of the long-lived assets exceeds estimated realizable value. For purposes of impairment testing under SFAS No. 142 and SFAS No. 144, the Company estimates fair value for each of its reporting units and compares such estimated fair values to the reporting unit’s net book value. If a reporting unit’s estimated fair value exceeds its net book value under this phase of testing, no further analysis is performed. To date, the Company has not been required to perform impairment testing beyond this initial phase. The Company generally estimates a reporting unit’s fair value under this phase based on a multiple of its revenues less cost of sales and selling, general and administrative expenses. The multiple utilized is based on values of comparable newspapers which have been sold in recent third party transactions. Other methods of estimating a reporting unit’s fair value such as estimated discounted cash flows may also be used. In estimating the fair value of reporting units the Company has owned for over 12 months, it generally utilizes the reporting unit’s cash flows for the preceding 12 months. For recently acquired or restructured reporting units, the Company generally utilizes budgeted cash flows for the upcoming fiscal year. For one recently acquired newspaper, the Company utilized estimated fiscal 2008 budgeted cash flows (adjusted for expected full year cost savings) for fiscal 2007 impairment testing since cost savings initiatives have not been fully reflected in the historical operating results and MediaNews has owned the newspaper less than one year. In addition, for fiscal 2007 impairment testing, the Company utilized a discounted cash flow model to evaluate one of its equity method investments. Forecasted future results contemplate the positive impact of certain cost savings initiatives and such results may not be achieved if the initiatives are not implemented as presently contemplated.

Because the impairment testing relies on historical and budgeted operating results to determine reporting unit fair value, if the actual results of fiscal year 2008 vary significantly from either historical or budgeted results, the Company may be required to record an impairment charge in the future. Similarly, an impairment charge could be required in the future if contemplated longer-term cost savings are not realized for the recently acquired newspaper and equity method investment noted above.

Debt Discount

Debt discount is amortized in a manner that results in a constant rate of interest over the life of the related debt and is included as a component of interest expense.

Income Taxes

The Company accounts for income taxes utilizing the liability method of accounting for income taxes. Under the liability method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to differences between the financial statement carrying amount and the tax basis of existing assets and liabilities.

Revenue Recognition

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 single copy and home delivery subscription revenue. 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 net of discounts is earned and recognized when the newspaper is delivered to the customer or sold to a home delivery independent contractor. Amounts received in advance of an advertisement or newspaper delivery are deferred and recorded on the balance sheet as a current liability to be recognized into income when the revenue has been earned.

Disclosures about Segments of an Enterprise and Related Information

The Company conducts business in one reporting segment and determines its reporting segment based on the individual operations that the chief operating decision maker reviews for purposes of assessing performance and making operating decisions. The individual operations have been aggregated into one segment because management believes they have similar economic characteristics, products, services, customers, production processes and distribution methods. The Company believes that aggregating the operations into one segment helps users understand the Company’s performance and assess its prospects. The Company’s newspaper operations, individually and in the aggregate, generally trend in the same direction because they are impacted by the same economic trends. A newspaper’s operating performance is most affected by newsprint prices and the health of the economy, particularly conditions within the retail, employment, real estate and automotive markets. While an individual newspaper may perform better or worse than the Company’s newspapers as a whole due to

specific conditions at that newspaper or within its local economy, such variances generally do not significantly affect the overall year over year performance comparisons of the Company.

While the Company, in addition to its newspapers, operates four radio stations and one television station, these non-newspaper operations are not significant to the Company’s operations as they comprise less than 1.0% of our consolidated revenue.

Comprehensive Income

Under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS No. 133”), the Company’s newsprint swap agreements were recorded at fair value and changes in the value of such contracts, net of income taxes, were reported in comprehensive income. As of June 30, 2007 and 2006, the Company had no outstanding newsprint swap agreements; however, amounts previously recorded in other comprehensive income related to a terminated newsprint swap agreement remained in other comprehensive income at June 30, 2007 due to the Company’s determination that the hedge became ineffective prior to the expiration of the original term of the agreement. The amount in accumulated other comprehensive loss related to the ineffective hedge is being amortized and charged to other (income) expense, net over the original term of the agreement as the forecasted newsprint purchase transactions originally contemplated in the hedging agreement continued to be probable of occurring. Also included in comprehensive income are the changes in fair value of interest rate swap agreements at one of the Company’s unconsolidated JOAs. See Note 10: Hedging Activities for further discussion. Comprehensive income for the Company also includes amounts related to the Company’s pension and postretirement plans as well as those at the Company’s unconsolidated JOAs. See Note 8: Employee Benefit Plans for further discussion. For purposes of calculating income taxes related to comprehensive income, the Company uses its combined statutory rate for federal and state income taxes.

Stock Based Compensation

The Company accounts for its Career Restricted Stock Unit (“RSU”) plan under SFAS No. 123(R), Share Based Payments. SFAS No. 123(R) requires all share based payments to employees be recognized in the income statement based on their fair values. The Company determines the fair value of the units in the quarter they are granted based on the RSU plan document and recognizes compensation expense over the vesting period of each grant. See Note 15: Career Restricted Stock Unit Plan for further discussion.

Dividends

The Company has never paid a dividend on its common stock. In connection with the anticipated consummation of an equity investment in the Company by The Hearst Corporation, it is expected that the Company will pay a dividend of up to $25 million. See Note 5: Acquisitions, Dispositions and Other Transactions for further discussion regarding the status of the equity investment in the Company by The Hearst Corporation. The Company’s long-term debt agreements contain covenants which, among other things, limit the annual and total amount the Company can pay in dividends to its shareholders.

Employees

Certain employees of the Company’s newspapers are employed under collective bargaining agreements, some of which have expired and are being negotiated.

Recently Issued Accounting Standards

In October 2006, the Financial Accounting Standards Board issued Statement of Financial Standards No. 158, Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R) (“SFAS No. 158”). SFAS No. 158 applies to all plan sponsors who offer defined benefit postretirement benefit plans and requires an entity to:

	•		recognize in its statement of financial position an asset for a defined benefit postretirement plan’s overfunded status or a liability for a plan’s underfunded status;

	•		measure a defined benefit postretirement plan’s assets and obligations that determine its funded status as of the end of the employer’s fiscal year;

•

recognize changes in the funded status of a defined postretirement plan in comprehensive income in the year in which the changes occur.

SFAS No. 158 does not change the amount of net periodic cost included in net income. The Company already measures its plan assets and benefit obligations as of the date of the Company’s fiscal year-end statement of financial position. On June 30, 2007, the Company adopted the recognition and disclosure provisions of SFAS No. 158. See Note 8: Employee Benefit Plans.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Standards No. 157, Fair Value Measurements, (“SFAS No. 157”). SFAS No. 157 provides enhanced guidance for using fair value to measure assets and liabilities and applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. Under the standard, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is in the process of evaluating what impact, if any, SFAS No. 157 is expected to have on the Company’s financial position or results of operations.

In February 2007, the Financial Accounting Standards Board issued Statement of Financial Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, (“SFAS No. 159”). SFAS No. 159 allows entities to voluntarily choose, at specified election dates, to measure many financial assets and financial liabilities at fair value (the “fair value option”). The election is made on an instrument-by-instrument basis and is irrevocable. If the fair value option is elected for an instrument, SFAS No. 159 requires all subsequent changes in fair value for that instrument be reported in earnings. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007, or for the Company, beginning July 1, 2008. The Company is in the process of evaluating what impact, if any, SFAS No. 159 is expected to have on the Company’s financial position or results of operations.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 provides guidance on how prior year misstatements should be taken into consideration when quantifying misstatements in current year financial statements for purposes of determining whether the current year’s financial statements are materially misstated. SAB 108 permits registrants to record the cumulative effect of initial adoption by recording the necessary “correcting” adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings. SAB 108 is effective for fiscal years ending on or after November 15, 2006. The adoption of this guidance in fiscal year 2007 had no impact on the Company’s consolidated financial statements.

In July 2006, the FASB issued Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, effective for fiscal years beginning after December 15, 2006. FIN 48 creates a single model to address uncertainty in tax positions, prescribes the minimum recognition threshold, and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 also has expanded disclosure requirements, which include a tabular rollforward of the beginning and ending aggregate unrecognized tax benefits, as well as specific detail related to tax uncertainties for which it is reasonably possible the amount of unrecognized tax benefit will significantly increase or decrease within twelve months. The adoption of FIN 48 in fiscal year 2008 is not expected to have a material impact on the Company’s financial statements.

Note 3: Joint Operating Agencies

Denver JOA

The Company through its wholly-owned subsidiary, The Denver Post Corporation, owns the masthead of The Denver Post and a 50% interest in the Denver Newspaper Agency (“DNA” or the “Denver JOA”), a partnership which publishes The Denver Post and the Rocky Mountain News, under the terms of a JOA agreement. DNA is the managing entity of the JOA agreement between The Denver Post Corporation and E.W. Scripps Company (owner of the Rocky Mountain News). Under the terms of the JOA agreement, DNA is responsible for performing all the business functions of The Denver Post and the Rocky Mountain News, including advertising and circulation sales, production, distribution and administration. News and

editorial costs related to The Denver Post are incurred outside of the Denver JOA and are the sole responsibility of the Company. Conversely, E.W. Scripps Company is solely responsible for the news and editorial costs of the Rocky Mountain News. In addition to the Company’s proportionate share of income from DNA, the editorial costs, miscellaneous revenues outside of the JOA, depreciation of editorial assets owned outside of the JOA, and other direct costs of The Denver Post are included in the line item “Income from Unconsolidated JOAs.” The Denver JOA agreement expires in 2051, unless otherwise extended.

Salt Lake City JOA

The Company, through its wholly-owned subsidiary, Kearns-Tribune, LLC, owns The Salt Lake Tribune and a 58% profit interest in the Newspaper Agency Company LLC (“NAC” or the “Salt Lake City JOA”). Although the Company has a majority of the Salt Lake City JOA’s profit interests, under the operating agreement for that entity, each of the Company and Deseret News Publishing Company (our partner in the Salt Lake City JOA) have an equal representation on that entity’s management committee. The Salt Lake City JOA is the managing entity under the JOA agreement between Kearns-Tribune, LLC and the Deseret News Publishing Company (owner of the Deseret Morning News). Under the terms of this JOA agreement, the Salt Lake City JOA is responsible for performing all the business functions of The Salt Lake Tribune and the Deseret Morning News, including advertising and circulation sales, production and distribution; however, the Salt Lake City JOA does not own any of the fixed assets used in its operations. Instead, beginning July 1, 2006, most of those assets are owned by its affiliate, Salt Lake Newspapers Production Facilities, LLC (“SLNPF”), 58% of which entity is owned directly by the Company and 42% of which entity is owned by Deseret News Publishing Company. SLNPF leases those assets to the Salt Lake City JOA; however, management of SLNPF is shared equally between Kearns-Tribune and Deseret News Publishing Company. Certain other assets used in the operations of the Salt Lake City JOA are owned solely by Deseret News Publishing Company, which leases those assets directly to the Salt Lake City JOA, and certain other assets are owned jointly by Kearns-Tribune, LLC and Deseret News Publishing Company, as tenants in common. Accordingly, for fiscal year 2007, the related depreciation is included in “Salt Lake City JOA” income statement data instead of the “Associated Revenues and Expenses Column.” Prior to July 1, 2006, Kearns-Tribune, LLC and Deseret News Publishing Company owned the fixed assets as joint tenants in common and did not charge lease payments to the Salt Lake City JOA. The Company’s $45.5 million investment in the fixed assets contributed to SLNPF as of July 1, 2006 was reclassified from property, plant and equipment to investment in unconsolidated JOAs. News and editorial costs related to The Salt Lake Tribune are incurred outside of the Salt Lake City JOA and are the sole responsibility of Kearns-Tribune, LLC. Conversely, Deseret News Publishing Company is solely responsible for the news and editorial costs of the Deseret Morning News. The Company records its 58% share of the results of the operations of the Salt Lake City JOA (subject to certain small adjustments) along with the operations of Kearns-Tribune, LLC, which consists principally of editorial costs, miscellaneous revenues outside of the JOA, amortization of intangibles and other direct costs of The Salt Lake Tribune and, prior to July 1, 2006, depreciation of fixed assets, in the line item “Income from Unconsolidated JOAs.” The Salt Lake City JOA expires in 2020, unless otherwise extended.

York JOA

The Company, through its wholly-owned subsidiary, York Newspapers, Inc. (“YNI”), owns the masthead of the York Daily Record, a daily morning newspaper, The York Dispatch, a daily evening newspaper, the York Sunday News, as well as a 100% interest in The York Newspaper Company (the York JOA). Under the terms of the York JOA agreement, the York JOA is responsible for all newspaper publishing operations, other than news and editorial, including production, sales, distribution and administration, of The York Dispatch, the York Daily Record and the York Sunday News.

The Company is responsible for the news and editorial content of the York Daily Record and a third party is responsible for providing the news and editorial content for The York Dispatch. Under the JOA agreement, the Company is entitled to all of the profits and losses of the York JOA and reimburses the third party for the cost of providing editorial and news content in The York Dispatch plus a management fee of $264,353 per year, indexed annually for inflation. The York JOA expires in 2024, unless otherwise extended. See Note 4: Investments in California Newspapers Partnership and Texas-New Mexico Newspapers Partnership for further discussion of the contribution of York to the Texas-New Mexico Newspapers Partnership.

The Company, through its wholly-owned subsidiary, Charleston Publishing Company, owns the Charleston Daily Mail and a limited partnership interest in Charleston Newspapers Holdings, L.P., which holds a 100% interest in Charleston Newspapers (the “Charleston JOA”). The Company is only responsible for the news and editorial content of the Charleston Daily Mail. Under its 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 is paid a management fee. The Company’s limited partnership interest does not entitle the Company to any share of the profits or losses of the limited partnership. The Charleston JOA expires in 2024, unless otherwise extended.

Detroit JOA

On August 3, 2005, the Company purchased the stock of The Detroit News, Inc., which included the editorial assets of The Detroit News, a daily newspaper published in Detroit, Michigan, and a limited partnership interest in the Detroit Newspaper Partnership, L.P. (“Detroit JOA”), for approximately $25.0 million. The Company is responsible for the news and editorial content of The Detroit News pursuant to a JOA agreement. In accordance with the Detroit JOA agreement, the Company receives a fixed preferred distribution each month with possible incremental distributions beginning in 2009 based on profit growth. However, such distributions can be suspended in the future to the extent that the Detroit JOA generates insufficient profits to fund such fixed preferred distributions. Any shortfall in distributions will be carried forward and made when sufficient profits are available. The fixed preferred distributions are as follows: $0.2 million per month during calendar year 2005; $5.0 million for calendar years 2006 and 2007; $4.0 million for 2008 and 2009; $3.0 million for 2010 and 2011; $2.0 million for 2012; and $1.9 million for all remaining years until specified amounts are paid. Under the terms of the Detroit JOA, the Company is also reimbursed for its news and editorial costs associated with publishing The Detroit News. The Detroit JOA expires in 2025, unless otherwise extended.

Because of the structure of the partnership and our ownership interest, the Company’s accounting for the investment in the Detroit JOA only includes the preferred distributions it receives from the Detroit JOA, which is different from the Company’s accounting for the Denver and Salt Lake City JOAs. The Company’s investment in The Detroit News, Inc. is included in other long-term assets.

Unconsolidated JOA Summarized Results

The following tables present the summarized results of the Company’s unconsolidated JOAs in Denver and Salt Lake City, along with related balance sheet data. The Salt Lake City JOA and Denver JOA information is presented at 100%, with the other partners’ share of income from the related JOAs subsequently eliminated. The editorial costs, miscellaneous revenues received outside of the JOA, depreciation, amortization, and other direct costs incurred outside of the JOAs by our subsidiaries associated with The Salt Lake Tribune and The Denver Post are included in the line “Associated Revenues and Expenses.” The 20% minority interest associated with The Denver Post through June 10, 2005 has not been reflected in the following tables.


	Year Ended June 30, 2007
	SLNPF and
	Salt Lake									Total Income
	City						Associated			from
	JOA			Denver			Revenues and			Unconsolidated
	Consolidated			JOA			Expenses			JOAs
	(Dollars in thousands)
*Income Statement Data:*
Total revenues	$	154,566		$	386,350		$	222

Cost of sales		32,560			121,477			32,341
Selling, general and administrative		56,813			199,491			11,977
Depreciation and amortization		5,913			45,065			3,629
Other		3,186			8,051			2,228

Total costs and expenses		98,472			374,084			50,175

Net income		56,094			12,266			(49,953	)
Partners’ share of income from unconsolidated JOAs		(22,692	)		(6,133	)		—

Income (loss) from unconsolidated JOAs	$	33,402		$	6,133		$	(49,953	)	$	(10,418	)


	Year Ended June 30, 2006
										Total Income
							Associated			from
	Salt Lake			Denver			Revenues and			Unconsolidated
	City JOA			JOA			Expenses			JOAs
	(Dollars in thousands)
*Income Statement Data:*
Total revenues	$	149,041		$	419,055		$	484

Cost of sales		34,222			132,893			34,530
Selling, general and administrative		55,017			207,263			12,272
Depreciation and amortization		—			56,225			20,082
Other		2,643			922			1,019

Total costs and expenses		91,882			397,303			67,903

Net income		57,159			21,752			(67,419	)
Partners’ share of income from unconsolidated JOAs		(23,914	)		(10,876	)		—

Income (loss) from unconsolidated JOAs	$	33,245		$	10,876		$	(67,419	)	$	(23,298	)


	Year Ended June 30, 2005
										Total Income
							Associated			from
	Salt Lake						Revenues and			Unconsolidated
	City JOA			Denver JOA			Expenses			JOAs
	(Dollars in thousands)
*Income Statement Data:*
Total revenues	$	146,904		$	433,183		$	527

Cost of sales		32,440			134,488			33,744
Selling, general and administrative		53,638			204,792			11,069
Depreciation and amortization		—			18,468			4,189
Other		2,485			(341	)		112

Total costs and expenses		88,563			357,407			49,114

Net income		58,341			75,776			(48,587	)
Partners’ share of income from unconsolidated JOAs		(24,351	)		(37,888	)		—

Income (loss) from unconsolidated JOAs	$	33,990		$	37,888		$	(48,587	)	$	23,291


	June 30, 2007						June 30, 2006
	SLNPF and Salt Lake City JOA						Salt Lake City
	Consolidated			Denver JOA			JOA			Denver JOA
	(Dollars in thousands)
*Balance Sheet Data:*
Current assets	$	19,868		$	55,363		$	15,800		$	64,352
Non-current assets		92,857			186,720			14,589			221,399
Current liabilities		17,651			42,856			24,589			50,396
Non-current liabilities⁽¹⁾		7,427			135,881			7,043			135,069

(1)

The June 30, 2006 amount for the Denver JOA includes the Denver JOA synthetic lease (related to the construction of a new office building) which was terminated in the second quarter of the Company’s fiscal year 2007. The Denver JOA operates on a calendar year-end basis and is not required to adopt the requirements of SFAS No. 158 until December 31, 2007. Had the Denver JOA adopted the requirements of SFAS No. 158 on December 31, 2006, the cumulative effect would have been to increase non-current liabilities by approximately $19.5 million. The Salt Lake City JOA did adopt SFAS No. 158 as of June 30, 2007; the impact of adoption was to increase non-current liabilities by approximately $2.8 million.

Depreciation and amortization expense increased significantly for the years ended June 30, 2007 and 2006, as compared to the year ended June 30, 2005 due to accelerated depreciation on certain fixed assets at the production facilities in Denver and Salt Lake City which will be or have been retired earlier than originally expected due to the construction of new production facilities at the respective locations. Prior to fiscal year 2007, the depreciation and amortization expense for the Salt Lake City fixed assets appeared in the associated revenues and expenses column as the Salt Lake City JOA does not own any of the fixed assets used in its operations. Instead, each partner in the JOA owned the fixed assets used in the operations of the Salt Lake City JOA. Effective July 1, 2006, the Salt Lake City JOA leases these assets from SLNPF which is included in the Salt Lake City JOA column for purposes of this presentation (eliminating the activity between the two entities).

Note 4: Investments in California Newspapers Partnership and Texas-New Mexico Newspapers Partnership

California Newspapers Partnership

On March 31, 1999, through its wholly-owned subsidiary, West Coast MediaNews LLC, the Company formed the California Newspapers Partnership (“CNP”) with S.F. Holding Corporation, formerly Stephens Media Group, (“Stephens”),

and The Sun Company of San Bernardino California (“Gannett”). MediaNews, Stephens and Gannett’s interests in the California Newspapers Partnership are 54.23%, 26.28% and 19.49%, respectively. The Company is the controlling partner and, therefore, the operations of the partnership are consolidated with those of the Company with minority interest reflected for Stephens’ and Gannett’s interests in the partnership.

At the formation of CNP, the Company also contributed long-term debt with a remaining balance of $6.6 million to the partnership. However, in accordance with the partnership agreement, the Company remains liable for the contributed debt. All principal and interest payments associated with this debt are charged to the MediaNews capital account of CNP as a distribution. Approximately $0.9 million, $0.9 million and $0.8 million of principal and interest payments were made in fiscal years 2007, 2006 and 2005, respectively, by CNP on behalf of the Company.

The California Newspapers Partnership is governed by a management committee. The management committee consists of seven members. MediaNews is entitled to appoint four of the members of the management committee, Stephens is entitled to appoint two, and Gannett is entitled to appoint one. Decisions of the management committee are by majority vote, except that unanimous votes are required for certain actions outside of the ordinary course of business, including asset transfers or sales, asset acquisitions, incurrence of debt and certain material changes in the partnership business.

The California Newspapers Partnership agreement also contains transfer of interests restrictions. Transfers may be made only subject to the “right of first offer” of the remaining partners. In addition, where no partner exercises its right of first offer, any sale of a partner’s interest must include the right for the remaining partners to “tag-along” and sell their interests to the third-party buyer at the same price. MediaNews has the right to require the other partners to sell their interests to any third party to which MediaNews sells its interest.

Stephens has a separate right to require CNP to purchase its interest in the partnership at fair market value. Upon notification of the exercise of this right and obtaining a valuation of the partnership interest, CNP has two years to complete the purchase. The Company is not currently aware of any intentions on the part of Stephens to exercise its put.

The minority interest liability reflects the fair market value of the net assets at the time they were contributed to CNP by Stephens and Gannett, plus the minority partners’ share of earnings, net of distributions since inception. CNP made cash distributions to the Company in the amount of $76.2 million, $34.2 million and $33.4 million in fiscal years 2007, 2006, and 2005, respectively.

Texas-New Mexico Newspapers Partnership

Effective March 3, 2003, MediaNews and Gannett Co., Inc. (“Gannett”) formed the Texas-New Mexico Newspapers Partnership (“TNMP”). MediaNews contributed substantially all the assets and operating liabilities of the Las Cruces Sun-News, The Daily Times (Farmington), Carlsbad Current-Argus, Alamogordo Daily News, and The Deming Highlight, as well as all the weekly and other publications published by these daily newspapers, in exchange for a 33.8% interest in the TNMP. Gannett contributed the El Paso Times, located in El Paso, Texas, in exchange for its 66.2% controlling partnership interest. Accordingly, MediaNews accounted for its share of the operations of TNMP under the equity method of accounting. However, effective December 26, 2005, MediaNews contributed to TNMP the assets of four daily newspapers published in southern Pennsylvania and Gannett contributed the assets of the Public Opinion, published in Chambersburg, PA. Assets contributed by MediaNews included The Evening Sun (Hanover), the Lebanon Daily News, and MediaNews’ interest in the entity that owns and publishes the York Daily Record and York Sunday News, which will continue to be published under the terms of a joint operating agreement along with The York Dispatch.

In conjunction with the partners’ contributions of newspaper assets to TNMP, the partnership agreement was amended and restated to provide, among other things, that MediaNews will have the right to appoint a majority of the members of TNMP’s Management Committee and control the day-to-day operations of TNMP. In addition, MediaNews now owns approximately 59.4% of TNMP, and Gannett owns the remaining 40.6%. Effective December 26, 2005, in conjunction with the change in ownership and management, TNMP became a consolidated subsidiary of MediaNews. The contributions to TNMP described in the paragraph above were accounted for as a non-monetary transaction at fair value based on an independent valuation. The restructuring of TNMP described above was treated as three separate, but simultaneous transactions: (1) a sale, whereby for accounting purposes, the Company sold to Gannett a 40.6% interest in its Pennsylvania newspapers, resulting in a $0.3 million non-monetary gain (pursuant to Statement of Financial Accounting Standards No. 153, Exchanges of Non-Monetary Assets), (2) the acquisition of an additional 25.6% interest in TNMP and (3) the acquisition

of a 59.4% interest in the Chambersburg, PA newspaper. As a result of the business combination, and the consolidation of the Texas-New Mexico Newspapers Partnership, the Company recorded the following: $86.0 million in intangible assets, $52.2 million in net tangible assets, $59.5 million to reflect Gannett’s minority interest, and eliminated its previous $76.2 million equity investment in the Texas-New Mexico Newspapers Partnership.

The minority interest liability reflects the fair market value of the net assets of Gannett’s share of TNMP, plus the minority partners’ share of earnings, net of distributions since December 26, 2005. TNMP made cash distributions to the Company in the amount of $26.7 million and $12.0 million in fiscal years 2007 and 2006, respectively. Prior to the TNMP restructuring, distributions were recorded as a reduction of the Company’s equity investment.

Note 5: Acquisitions, Dispositions and Other Transactions

Fiscal Year 2007

Acquisition (San Jose Mercury News, Contra Costa Times, The Monterey County Herald and Pioneer Press)

On August 2, 2006, MediaNews and The McClatchy Company (“McClatchy”) consummated the closing under the Stock and Asset Purchase Agreement dated as of April 26, 2006, between the Company and McClatchy, pursuant to which the California Newspapers Partnership (“CNP”), a 54.23% subsidiary of the Company, purchased the Contra Costa Times and the San Jose Mercury News and related publications and Web sites for $736.8 million. The acquisition, including estimated fees, was funded in part with contributions of $340.1 million from the Company’s partners in CNP ($337.2 million was paid by the partners directly to McClatchy). The Company’s share of the acquisition, including estimated investment banking fees, was approximately $403.0 million and was funded with borrowings under a new term loan “C” and its existing bank revolver (See Note 6: Long-Term Debt). The $403.0 million acquisition cost excludes cash acquired and other deal costs (principally legal and accounting consultations).

On August 2, 2006, Hearst and McClatchy consummated the closing under the Stock and Asset Purchase Agreement dated as of April 26, 2006, between Hearst and McClatchy, pursuant to which Hearst purchased The Monterey County Herald and the St. Paul Pioneer Press and related publications and Web sites for $263.2 million.

Acquisition (Torrance)

On December 15, 2006, Hearst acquired (see discussion under Hearst Stock Purchase Agreement below) the Daily Breeze and three weekly newspapers, published in Torrance, California (the “Publications”) for approximately $25.9 million, which included $1.1 million of working capital. The Publications are in close proximity to the Company’s operations in Long Beach, California. The Daily Breeze had daily circulation of approximately 67,000 at March 31, 2007. As a result of the transaction, the Company has recorded the following: $23.8 million in intangible assets ($22.5 million — goodwill and $1.3 million — covenants not to compete) and $2.1 million in tangible assets, the majority of which is related to fixed assets. The purchase accounting for this transaction is preliminary and subject to change.

Hearst Stock Purchase Agreement

On August 2, 2006, MediaNews and The Hearst Corporation (“Hearst”) entered into a Stock Purchase Agreement which was amended on May 1, 2007 (the “MediaNews/Hearst Agreement”) pursuant to which (i) Hearst agreed to make an equity investment of up to $299.4 million (subject to adjustment under certain circumstances) in the Company (such investment will not include any governance or economic rights or interest in the Company’s publications in the San Francisco Bay area or “Bay Area” assets) and (ii) the Company has agreed to purchase from Hearst The Monterey County Herald, the St. Paul Pioneer Press and the Torrance Daily Breeze with a portion of the Hearst equity investment in the Company. The equity investment will afford Hearst an equity interest of approximately 30% (subject to adjustment in certain circumstances) in the Company, excluding the Company’s economic interest in the San Francisco Bay area newspapers. The equity investment by Hearst in the Company is subject to antitrust review by the Antitrust Division of the Department of Justice. The Antitrust Division has requested information in connection with this review, and the Company has completed its response to this request. The mandatory waiting period required to consummate the transaction will expire on October 18, 2007.

The Company has agreed to manage The Monterey County Herald, the St. Paul Pioneer Press and the Torrance Daily Breeze during the period of their ownership by Hearst. Under the MediaNews/Hearst Agreement, the Company has all the economic risks and rewards associated with ownership of these newspapers and is entitled contractually to retain all of the cash flows generated by them as a management fee. As a result, the Company began consolidating the financial statements of The Monterey County Herald and St. Paul Pioneer Press beginning August 2, 2006, and the Torrance Daily Breeze on December 15, 2006. The Company also agreed that, at the election of MediaNews or Hearst, the Company will purchase The Monterey County Herald, the St. Paul Pioneer Press and the Torrance Daily Breeze for $290.6 million (plus reimbursement of Hearst’s costs and cost of funds in respect of its purchase of such newspapers) if for any reason Hearst’s equity investment in the Company is not consummated. To purchase these newspapers from Hearst without an equity investment by Hearst, the Company would need to obtain additional financing to fund this purchase and/or seek alternative financing arrangements with Hearst or another party. As of June 30, 2007, the Company has recorded $306.5 million related to Hearst’s cost of $290.6 million and the $15.9 million accretion of Hearst’s cost of funds for this purchase.

As a result of the above transactions (acquisition of San Jose Mercury News and Contra Costa Times and management of The Monterey County Herald and St. Paul Pioneer Press), the Company has recorded the following, which includes investment banking fees, deal costs and other capitalized costs: $819.4 million in intangible assets ($360.3 million — goodwill; $264.7 million — mastheads; $13.7 million — subscriber lists; and $180.7 million in advertiser lists and other finite lived intangibles) and $198.7 million in net tangible assets (the majority of which is related to fixed assets). The purchase accounting for these transactions is preliminary and subject to change.

The unaudited pro forma consolidated statement of income information for the years ended June 30, 2007 and 2006, set forth below, presents the Company’s results of operations as if the August 2, 2006 transactions (acquisition of San Jose Mercury News and Contra Costa Times and management and consolidation of The Monterey County Herald and St. Paul Pioneer Press) described above had occurred at the beginning of the periods presented and is not necessarily indicative of future results or actual results that would have been achieved had the transactions occurred as of the beginning of such periods.


	Year Ended June 30,
	2007		2006
	(Dollars in Thousands)
Operating Revenue	$	1,381,846	$	1,404,059
Net Income	$	38,118	$	17,775
Net Income Applicable to Common Stock	$	20,802	$	1,276

Original Apartment Magazine Sale

On September 29, 2006, the California Newspapers Partnership sold the Original Apartment Magazine for $14.0 million. The sale resulted in an immaterial loss.

Acquisition (Santa Cruz)

On February 2, 2007, the California Newspapers Partnership (“CNP”) acquired the Santa Cruz Sentinel, published in Santa Cruz, California, for approximately $45.0 million, plus an adjustment for working capital. Contributions from the partners in CNP (including the Company) were used to fund the acquisition. The Company’s portion of the acquisition (including working capital) was approximately $25.0 million and was funded with borrowings under the Company’s bank credit facility. Santa Cruz is in close proximity to the Company’s operations in San Jose. The Santa Cruz Sentinel had daily circulation of approximately 25,000 at March 31, 2007. As a result of the acquisition, the Company has recorded the following: $36.4 million in intangible assets ($16.8 million — goodwill, $5.8 million — masthead, $1.0 million — subscriber lists and $12.8 million — advertiser lists) and $9.6 million in tangible assets, the majority of which is related to fixed assets. The purchase accounting for the business combination is preliminary and subject to change.

Management Agreement (Danbury)

On March 30, 2007, the Company entered into an agreement with Hearst regarding the management of The News-Times (Danbury, Connecticut), which was purchased by Hearst on March 30, 2007 for $80.0 million, plus an adjustment for working capital. Under the agreement, the Company controls the management of both the Connecticut Post (owned by the

Company) and The News-Times and is entitled to 73% of the profits and losses of both newspapers on a combined basis; however, the Company and Hearst retain ownership of the assets and liabilities of the Connecticut Post and The News-Times, respectively. Profits and losses refer to net income, adjusted so that each partner retains 100% of the periodic depreciation and amortization recorded relating to its contributed assets. The partners also retain 100% of any related gain or loss taken related to the disposition of its contributed assets. As a result of entering into the management agreement, the Company began consolidating the results of The News-Times and recording minority interest for Hearst’s 27% interest beginning March 30, 2007. The accounting resulting from entering into the management agreement created a non-monetary exchange (pursuant to Statement of Financial Accounting Standards No. 153, Exchanges of Non-Monetary Assets). The Company accounted for this exchange as two separate, but simultaneous events: (1) a sale, whereby for accounting purposes, the Company sold to Hearst a 27% interest in the Connecticut Post, resulting in the Company recording a non-monetary gain of approximately $27.0 million and (2) the acquisition of a 73% interest in The News-Times. As a result of the transaction, the Company has recorded the following: $71.8 million in intangible assets ($34.4 million — goodwill, $28.1 million — subscriber lists, $9.3 million — masthead) and $9.8 million in tangible assets, the majority of which is related to fixed assets. The accounting for the business combination is preliminary and subject to change.

Fiscal Year 2006

Prairie Mountain Publishing Company Partnership Formation

On February 1, 2006, MediaNews and E.W. Scripps Company (“Scripps”) completed the formation of the Prairie Mountain Publishing Company LLP (formerly named Colorado Publishing Company LLP). Upon formation of the Prairie Mountain Publishing Company LLP (“PMP”), MediaNews contributed substantially all of the operating assets used in the publication of the newspapers published by Eastern Colorado Publishing Company, comprised of several small daily and weekly newspapers, and Scripps contributed substantially all of the operating assets used in the publication of the Daily Camera and the Colorado Daily, both published in Boulder, Colorado. In addition to the assets contributed to PMP, MediaNews paid Scripps approximately $20.4 million to obtain its 50% interest in PMP. Scripps owns the remaining 50% interest. The management committee of PMP is comprised of four members, two of whom are appointed by MediaNews and two of whom are appointed by Scripps. Under the partnership agreement, PMP is required to make distributions to the Company equal to 50% of earnings, less working capital required by the partnership. The Company’s contribution to PMP was treated as two separate, but simultaneous transactions: (1) a sale, whereby for accounting purposes, the Company sold to Scripps a 50% interest in Eastern Colorado Publishing Company, resulting in a $0.8 million non-monetary gain (pursuant to Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets) and approximately $16.6 million of assets were reclassified to equity investments, and (2) the acquisition of a 50% interest in the newspapers contributed to PMP by Scripps. As a result, effective February 1, 2006, MediaNews no longer consolidates the operations of Eastern Colorado Publishing Company contributed to PMP and began accounting for its share of the operations of PMP under the equity method of accounting.

Texas-New Mexico Newspapers Partnership Restructuring and The Detroit News Acquisition

See Note 4: Investment in California Newspapers Partnership and Texas-New Mexico Newspapers Partnership for discussion of the December 2005 Texas-New Mexico Newspapers Partnership restructuring and Note 3: Joint Operating Agencies for discussion of our August 2005 purchase of The Detroit News.

Fiscal Year 2005

Acquisition (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”), the publisher of The Park Record, in Park City, Utah. The Singleton Family Revocable Trust owned 50% of the outstanding stock of Diversified at the time of purchase. The purchase price was approximately $8.0 million (plus transaction costs of $0.2 million), plus adjustment to reflect final working capital balances. The Company has allocated the purchase price as follows: $0.8 million tangible assets (primarily fixed assets), $3.6 million identifiable intangible assets ($2.0 million, masthead; $0.4 million, subscriber list; $1.2 million, advertiser list) and $3.8 million was recorded as goodwill. An additional $1.7 million of goodwill was recorded as the offset to the deferred tax liability established in association with the difference between the

book and tax basis in the Diversified common stock at the date of the transaction. 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. Mr. William Dean Singleton, Vice Chairman, Chief Executive Officer and a director of the Company and Mr. Howell Begle, Assistant Secretary, General Counsel and a director of the Company, are trustees of The Singleton Family Revocable Trust. Mr. Singleton is a beneficiary of The Singleton Family Revocable Trust.

Other

During fiscal year 2005, the Company purchased several small weekly publications in its existing newspaper markets for an aggregate purchase price of approximately $2.1 million.

On June 10, 2005, the Company acquired for approximately $45.9 million the remaining 20% of The Denver Post Corporation which it did not own.

Note 6: Long-Term Debt

Long-term debt consisted of the following:


		June 30,
		2007			2006
		(Dollars in thousands)
Bank Credit Facility (Revolving Portion)	(I)	$	60,200		$	146,550
Bank Term Loan A	(I)		100,000			100,000
Bank Term Loan B	(I)		144,317			145,790
Bank Term Loan C	(I)		346,500			–
Various Notes, payable through 2013	(II)		20,697			22,770
6.875% Senior Subordinated Notes, due 2013	(III)		298,154			297,925
6.375% Senior Subordinated Notes, due 2014	(IV)		149,002			148,888

			1,118,870			861,923
Less current portion of long-term debt			(17,343	)		(3,926	)

		$	1,101,527		$	857,997

	I.		On December 30, 2003, the Company refinanced its bank credit facility (the “Credit Facility”). The Credit Facility (prior to being amended as discussed below) provided for borrowings of up to $600.0 million, consisting of a $350.0 million revolving credit facility and a $250.0 million term loan “B” facility.

			On September 17, 2007, the Company amended the December 30, 2003 Credit Facility to, among other things, increase the consolidated total leverage ratio and the ratio of consolidated senior debt to consolidated operating cash flow (effective June 30, 2007) and lower the ratio of consolidated operating cash flow to consolidated fixed charges for the quarters ending September 30 and December 31, 2007. As a result of the amendment, all borrowing margins for all loan tranches of the Credit Facility were increased by 50 basis points. The Company also voluntarily reduced the revolver under the Credit Facility from $350.0 million to $235.0 million effective October 1, 2007 (See Note 17: Subsequent Events).

			Prior amendments to the December 30, 2003 Credit Facility include the following:

	•		On August 30, 2004, the Company entered into an amendment and restatement of the Credit Facility which refinanced term loan “B” with a $100.0 million term loan “A” and a $148.8 million term loan “C.”

	•		On September 8, 2005, the Company amended the Credit Facility in order to reduce borrowing margins. The amendment provided for a $147.3 million term loan “B,” which was used to refinance term loan “C” discussed above.

•

On August 2, 2006, the Company amended the Credit Facility. The amendment authorized a new $350.0 million term loan “C” facility and approved the purchase of the Contra Costa Times, San Jose Mercury News, The Monterey County Herald and the St. Paul Pioneer Press by the Company. The $350.0 million term loan “C” facility was borrowed on August 2, 2006 and used, along with revolving credit facility borrowings of $56.3 million, to fund the Company’s portion of the purchase price for the Contra Costa Times and the San Jose Mercury News (See Note 5: Acquisitions, Dispositions and Other Transactions) and the related fees to amend the Credit Facility.

			The following is a summary description of the December 30, 2003 Credit Facility.

			Prior to the maturity date of the revolving facility, borrowings under the revolving facility are permitted to be borrowed, repaid and reborrowed without premium or penalty (other than customary breakage costs). Amounts repaid under the term loans “A,” “B” and “C” are not available for reborrowing. The Credit Facility is guaranteed by the Company’s subsidiaries (with certain exceptions) and secured by first priority liens and security interests in all of the capital stock (or other ownership interests) of each of the Company’s and the guarantors’ subsidiaries (with certain exceptions) and its interest in the Texas-New Mexico Newspapers Partnership. The Company also has pledged its interest in the Denver JOA to secure the bank credit facility (subject to certain limitations). The Credit Facility contains a number of covenants that, among other things, restrict the Company’s ability and its subsidiaries’ ability to dispose of assets, incur additional indebtedness, pay dividends, make capital contributions, create liens on assets, make investments, make acquisitions and engage in mergers or consolidations. In addition, the Credit Facility requires compliance with certain financial ratios, including a maximum consolidated debt to consolidated operating cash flow ratio, a maximum consolidated senior debt to consolidated operating cash flow ratio and a minimum consolidated operating cash flow to consolidated fixed charges ratio. At June 30, 2007, the Company was in compliance with all amended Credit Facility covenants. Borrowings under the Credit Facility bear interest at rates based upon, at the Company’s option, either 1) the base rate (the higher of (a) the Federal Funds Rate plus ¹/2 of 1% and (b) Bank of America’s prime rate) or 2) Eurodollar rate plus a spread based on the Company’s leverage ratio. At June 30, 2007, Eurodollar borrowing margins varied from 0.75% to 1.25% and base rate borrowing margins were 0% on the revolver portion of the Credit Facility. At June 30, 2007, borrowing margins on term loan “A” were set at 1.25% and 0.00% for Eurodollar and base rate borrowings, respectively. 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. Term loan “B” bears interest based upon, at the Company’s option, Eurodollar or base rates, plus a borrowing margin of 1.25% or 0.25%, respectively. Term loan “B” requires quarterly principal payments as follows: $0.4 million through December 2009, increasing to $35.2 million from March through September 2010, with the remaining balance due at maturity on December 30, 2010. At June 30, 2007, Term loan “C” bears interest based upon, at the Company’s option, Eurodollar, plus a borrowing margin of 1.75%, or base rate, plus a borrowing margin of .75%. Term loan “C” requires quarterly principal payments as follows: $0.875 million through June 2012; and $82.25 million from June 2012 through March 2013, with the remaining balance due at maturity on August 2, 2013. See Note 17: Subsequent Events for changes in borrowing margins to the bank credit facility as a result of the September 17, 2007 amendment.

			In addition to interest, the Company pays an annual commitment fee of 0.25% to 0.375% on the unused portion of the commitment based on the Company’s leverage ratio. The annual commitment fee is currently set at 0.375%. Prior to the September 2007 amendment discussed above, at June 30, 2007, the Company had $272.7 million available under the Credit Facility for future borrowings, net of $17.1 million in outstanding letters of credit. However, the total amount the Company can borrow at any point in time may be reduced by limits imposed by the financial covenants of its various debt agreements. The Company incurred debt issuance costs of $3.8 million related to the December 31, 2003 $600.0 million Credit Facility, and another $4.9 million related to the amendments to the facility, which, for the August 2, 2006 amendment, included $1.0 million for the lender to backstop the commitment for the borrowing. These debt issuance costs have been capitalized as a deferred charge, and are being amortized on a straight-line basis over the term of the Credit Facility as a component of amortization expense.

			As a result of the September 17, 2007 amendment to the Credit Facility, all the interest rates described above increased 50 basis points effective with the date of the amendment. After giving effect to the voluntary October 1, 2007 reduction to the revolver, the amount available under the revolving portion of the Credit Facility, net of letters of credit, was $157.7 million at June 30, 2007.

	II.		In connection with various acquisitions, the Company’s subsidiaries have issued notes payable to prior owners and assumed certain debt obligations. The notes payable and other debt obligations bear interest at rates ranging from 0.0% to 7.0%. The notes bearing interest at below market rates have been discounted at rates ranging from 8.5% to 10.5%, which reflects the prevailing rate at the date of acquisition. The majority of these notes and other debt obligations are unsecured obligations of the Company.

	III.		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”). Proceeds from the sale of the 6.875% Notes were reduced by an original issue discount of $2.6 million and debt issuance costs of $6.0 million. The Company reduced the principal amount of the 6.875% Notes by the amount of the original issue discount and is amortizing the discount as a component of interest expense using the effective interest method. The debt issuance costs have been capitalized as a deferred charge, and are being amortized on a straight-line basis over the term of the 6.875% Notes as a component of amortization expense. The indebtedness evidenced by the 6.875% Notes is subordinated and junior in right of payment to obligations under the bank credit facility and related term loans. No principal payments are required on the 6.875% Notes until October 1, 2013, at which time all outstanding principal and interest is due and payable. Semi-annual interest payments are due and payable on October 1 and April 1 of each year. The 6.875% Notes are general unsecured obligations of the Company ranking equal in right of payment with the 6.375% Notes.

	IV.		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”). Proceeds from the sale of the 6.375% Notes were reduced by an original issue discount of $1.4 million and debt issuance costs of $1.8 million. The principal amount of the 6.375% Notes has been reduced by the amount of the original issuance discount, which is being amortized as a component of interest expense using the effective interest method. The debt issuance costs have been capitalized as a deferred charge and are being amortized on a straight-line basis over the term of the 6.375% Notes as a component of amortization expense. The indebtedness evidenced by the 6.375% Notes is subordinated and junior in right of payment to obligations under the Credit Facility and related term loans. No principal payments are required until April 1, 2014, at which time all outstanding principal and interest is due and payable. Semi-annual interest payments are due and payable on January 1 and July 1 of each year. The 6.375% Notes are general unsecured obligations of the Company ranking equal in right of payment with the 6.875% Notes.

Maturities of long-term debt for the next five fiscal years and thereafter are shown below (in thousands).


	As of
	June 30, 2007
2008	$	17,343
2009		31,881
2010		176,462
2011		100,647
2012		5,461
Thereafter		787,076

	$	1,118,870

Interest paid during the fiscal years ended June 30, 2007, 2006 and 2005 was approximately $77.1 million, $55.2 million and $55.4 million, respectively. Approximately $0.3 million, $2.0 million and $0.7 million of interest was capitalized during fiscal years 2007, 2006 and 2005, respectively.

Letters of credit have been issued in favor of an insurance company providing workers’ compensation insurance coverage to the Company and its subsidiaries totaling approximately $17.1 million as of June 30, 2007.

The fair market value of the 6.875% Notes and 6.375% Notes at June 30, 2007 was approximately $258.0 million and $124.9 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 original issue price net of remaining original issue discounts, if applicable.

Note 7: Leases

The California Newspapers Partnership leases assets under capital leases. Assets under capital leases and related accumulated amortization are included in property, plant and equipment in the accompanying consolidated balance sheets at June 30, as follows:


	2007			2006
	(Dollars in thousands)
Building and equipment	$	6,406		$	6,406

Accumulated amortization		(4,095	)		(3,882	)


Assets under capital leases, net	$	2,311		$	2,524

Amortization on capital lease assets is included in depreciation expense in the accompanying financial statements.

The Company and its subsidiaries also lease certain facilities and equipment under operating leases, some of which contain renewal or escalation clauses. Rent expense was approximately $15.9 million, $7.8 million and $8.2 million during fiscal years 2007, 2006, and 2005, respectively. Contingent rentals are not significant. Future minimum payments on capital and operating leases are as follows at June 30, 2007:


	Capital			Operating
	Leases			Leases
	(Dollars in thousands)
2008	$	867		$	11,207

2009		867			9,643

2010		867			7,229

2011		867			5,422

2012		867			5,040

Thereafter		6,068			22,548


Total minimum lease payments		10,403		$	61,089


Less amount representing interest		(4,640	)


Present value of net future lease payments	$	5,763

Note 8: Employee Benefit Plans

Pension and Post-Retirement Plans

In conjunction with the fiscal year 1998 acquisitions of The Sun in Lowell, Massachusetts and the Daily News in Los Angeles, California, the Company assumed non-contributory defined benefit pension plans, which covered substantially all the employees at the acquired newspapers. The Sun’s plan was combined with the frozen plan of New England Newspapers, Inc., a wholly owned subsidiary of the Company. In addition, shortly after the acquisition of Daily News, the Company elected to freeze the plan assumed in conjunction with that acquisition. Accordingly, all current service cost under that plan has been terminated. Until April 1, 2005, participants in the plan assumed in conjunction with the acquisition of The Sun continued to accrue benefits associated with current services, based on years of service and estimated compensation prior to retirement. Effective April 1, 2005, the Company froze the defined benefit plan benefits and recognized an immaterial curtailment loss.

The Denver Post sponsors two non-contributory defined benefit pension plans, which cover substantially all its current employees. Both plans provide benefits based on employees’ years of service and compensation during the years immediately preceding retirement. The Denver Post also sponsors post-retirement health care and life insurance plans that

provide certain union employees and their spouses with varying amounts of subsidized medical coverage upon retirement and, in some instances, continued life insurance benefits until age 65 if the employee retires prior to age 65. The Denver Post editorial employees, terminated vested employees and retired employees are covered by the two non-contributory plans sponsored by The Denver Post as discussed above. During the fourth quarter of fiscal year 2006, the Company offered early retirement and severance to certain employees of The Denver Post. In conjunction with the early retirement and severance offers, the Company recognized a small loss related to the curtailment and the provision of special termination benefits.

Effective December 31, 2003, the New England Newspapers, Inc., Daily News and one of The Denver Post plans were merged into one master plan: the MediaNews Plan. The Denver Post Guild (union) pension plan remains as a separate plan and a nonqualified pension plan was also created as a result of the plan merger.

In conjunction with the Company’s August 2, 2006 acquisition of the San Jose Mercury News and management and consolidation of the St. Paul Pioneer Press (See Note 5: Acquisitions, Dispositions and Other Transactions), the Company assumed non-contributory defined benefit pension plans and postretirement employment benefit plans which cover certain union employees at these newspapers. The preliminary purchase accounting related to the assumption of the employee benefit plans for the San Jose Mercury News and the St. Paul Pioneer Press resulted in the Company recording liabilities of $31.7 million related to pension obligations and $1.2 million related to other postretirement employment benefits. The discount rate used when the Company assumed these plans was 6.0%. In December 2006, the Company froze the defined benefit plan at the San Jose Mercury News effective February 2007. The impact to the plan was immaterial and no curtailment gain or loss was recognized.

The Company sponsors a post-retirement health care plan for certain former and current Kearns-Tribune, LLC employees that provided subsidized medical coverage for former employees who retired prior to January 1, 2005. Effective January 1, 2005, the Company no longer provides 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.

Effective July 1, 2003, the Company adopted an executive retiree medical benefit plan, which provides for health care coverage during the retirement for the eligible participants (corporate officers). There are minimum age and years of service criteria for eligibility for benefits under this plan.

The Company’s funding policy for all plans is to make at least the minimum annual contributions required by the Employee Retirement Income Security Act of 1974.

The Company has additional post-employment agreements and obligations, none of which are material individually or in aggregate.

On June 30, 2007, the Company adopted the recognition and disclosure provisions of SFAS No. 158. This statement required the Company to recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of its retirement plans in the June 30, 2007 balance sheet, along with a corresponding adjustment to accumulated other comprehensive income, net of tax. The adjustment to accumulated other comprehensive income at adoption represents the net unrecognized actuarial losses and unrecognized prior service costs, all of which were previously netted against the retirement plans’ funded status in the Company’s balance sheet pursuant to the provisions of SFAS No. 87. These amounts will be subsequently recognized as net periodic pension cost pursuant to the Company’s historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods that are not recognized as net periodic pension cost in the same periods will be recognized as a component of other comprehensive income. Those amounts will subsequently be recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income at adoption of SFAS No. 158. The adoption of SFAS No. 158 had no effect on the Company’s consolidated statements of income for the year ended June 30, 2007, or for any prior period presented, nor will it affect the Company’s operating results in future periods.

While the adoption had no effect on the Company’s consolidated statements of income, unrecognized actuarial amounts were reflected on the Company’s consolidated balance sheet as of June 30, 2007, resulting in a $5.3 million reduction in the net defined benefit plan and other post employment benefit liabilities, a $3.8 million increase to minority interest, a $2.2 million increase to deferred taxes and a $0.7 million decrease to shareholders’ equity for the plans associated with the Company’s consolidated subsidiaries (excluding the Company’s JOAs).


		Page
Part I
Item 1.	Business		3
Item 1A.	Risk Factors		12
Item 1B.	Unresolved Staff Comments		15
Item 2.	Properties		15
Item 3.	Legal Proceedings		15
Item 4.	Submission of Matters to a Vote of Security Holders		15

Part II
Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities		16
Item 6.	Selected Financial Data		17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation		20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		37
Item 8.	Financial Statements and Supplementary Data		39
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		39
Item 9A.	Controls and Procedures		39
Item 9B.	Other Information		39

Part III
Item 10.	Directors, Executive Officers and Corporate Governance		40
Item 11.	Executive Compensation		41
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		51
Item 13.	Certain Relationships and Related Transactions, and Director Independence		54
Item 14.	Principal Accountant Fees and Services		55

Part IV
Item 15.	Exhibits and Financial Statement Schedules		57

Signatures
Second Amended and Restated Joint Operating Agreement
Subsidiaries
Certification Pursuant to Section 302
Certification Pursuant to Section 302
Certification Pursuant to Section 302
Certification Pursuant to Section 906
Certification Pursuant to Section 906

	1.		The list of financial statements contained in the accompanying Index to Consolidated Financial Statements and Schedule Covered by Report of Independent Registered Public Accounting Firm is filed as a part of this Report (see page 58).

	2.		Financial Statement Schedule

			The financial statement schedule contained in the accompanying Index to Consolidated Financial Statements and Schedule Covered by Report of Independent Registered Public Accounting Firm is filed as a part of this Report (see page 58).

	3.		Exhibits

			The exhibits listed in the accompanying Index to exhibits are filed as a part of this Annual Report (see page 58).


	Page
Report of Independent Registered Public Accounting Firm		59
Consolidated Balance Sheets as of June 30, 2007 and 2006		60
Consolidated Statements of Operations for the Fiscal Years Ended June 30, 2007, 2006 and 2005		62
Consolidated Statements of Changes in Shareholders’ Equity for the Fiscal Years Ended June 30, 2007, 2006 and 2005		63
Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2007, 2006 and 2005		64
Notes to Consolidated Financial Statements		65

Newspaper Agency Company, LLC		95
Report of Independent Registered Accounting Firm		97
Balance Sheet June 30, 2007		98
Statement of Earnings and Members’ Equity for the Fiscal Year Ended June 30, 2007		99
Statement of Cash Flows for the Fiscal Year Ended June 30, 2007		100
Notes to Financial Statements		101

Newspaper Agency Corporation		114
Report of Independent Registered Public Accounting Firm		116
Balance Sheets as of June 30, 2006 (Unaudited), December 31, 2005 and 2004		117
Statements of Earnings and Retained Earnings (Accumulated Deficit) for the Six Months Ended June 30, 2006 (Unaudited) and for the Years Ended December 31, 2005 and 2004		119
Statements of Cash Flows for the Six Months Ended June 30, 2006 (Unaudited) and for the Years Ended December 31, 2005 and 2004		120
Notes to Financial Statements		121


	Pension Plans									Other Benefits
	2007			2006			2005			2007			2006			2005
	(Dollars in thousands)
Change in Benefit Obligation
Benefit Obligation at Beginning of Year	$	102,360		$	111,182		$	98,188		$	9,992		$	4,880		$	5,495
Service Cost		2,395			1,125			1,038			478			557			434
Interest Cost		15,785			5,679			5,927			655			295			327
Acquisition		178,859			—			—			1,204			—			—
Amendments		—			160			(720	)		—			49			(128	)
Other Adjustments		—			307			—			—			2,032			—
Actuarial Loss (Gain)		(892	)		(10,257	)		12,561			(1,291	)		2,715			(650	)
Benefits Paid		(14,371	)		(5,836	)		(5,812	)		(834	)		(536	)		(598	)

Benefit Obligation at End of Year	$	284,136		$	102,360		$	111,182		$	10,204		$	9,992		$	4,880

Change in Plan Assets
Fair Value of Plan Assets at Beginning of Year	$	85,993		$	82,580		$	81,387		$	—		$	—		$	—
Actual Return on Plan Asset