##### 



SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549


FORM 10-K

(Mark One)

|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|[ü]  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|    
|     |  | For the fiscal year ended December 31, 2003
      or                                    
|    
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|    
|     |  | For the transition period from  to                                                      

Commission File Number 1-5846

THE LIBERTY CORPORATION

(Exact name of Registrant as specified in its charter)


|                                                                              |  |                                                
|----------------------------------------------------------------------------- |  | -----------------------------------------------
|South Carolina
(State or other jurisdiction of
incorporation or organization) |  | 57-0507055
(I.R.S. Employer
Identification No.)

|                                                                                                                                                                  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Post Office Box 502, 135 South Main Street, Greenville, S. C. 29602
(Address of principal executive offices)                                            (Zip Code)

Registrants telephone number, including area code                        (864) 241-5400

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

|                                                                                                          |  |                                                
|--------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------
|Title of Each Class                                                                                       |  | Name of Each Exchange
on Which Registered      
|Common Stock, no par value per share
Rights to Purchase Series A Participating Cumulative Preferred Stock |  | New York Stock Exchange
New York Stock Exchange

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

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. [  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ü] No [  ]

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of February 13, 2004:

|                           |  |             
|-------------------------- |  | ------------
|Common Stock, No Par Value |  | $933,941,333

The number of shares outstanding of each of Registrants classes of common stock as of February 13, 2004:

|                           |  |           
|-------------------------- |  | ----------
|Common Stock, No Par Value |  | 18,905,695

DOCUMENTS INCORPORATED BY REFERENCE

Portions of The Liberty Corporation Proxy Statement for the Annual Meeting
of Shareholders on May 4, 2004 are incorporated into Part III, Items 10, 11,
12, and 13 by reference.

This report is comprised of pages 1 through 43. The exhibit index is on page 38.





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Part I

Item 1. Business

General

The Registrant, The Liberty Corporation (Liberty or the Company) is a
holding company with operations primarily in the television broadcasting
industry. The Companys television broadcasting subsidiary, Cosmos
Broadcasting, consists of fifteen network-affiliated television stations (the
stations) principally located in the South and Midwest, a cable advertising
company, and a professional broadcast equipment dealership. Eight of the
Companys television stations are affiliated with NBC, five with ABC, and two
with CBS. The Companys principal executive offices are in Greenville, South
Carolina.

Additional information concerning Libertys subsidiaries and divisions is
included in Managements Discussion and Analysisincluded in Item 7 of this
report and incorporated herein by reference.

Television Broadcasting and Related Operations

The following table shows data on the stations owned by the Company as of
December 31, 2003:

|                    |  |         |  |     |     |         |  |             |    |     |  |         |  |            |      |          |  |            |   |            |  |      |      |         |  |            |      |  |  |  |      |  |  |  |  | 
|------------------- |  | ------- |  | --- | --- | ------- |  | ----------- | -- | --- |  | ------- |  | ---------- | ---- | -------- |  | ---------- | - | ---------- |  | ---- | ---- | ------- |  | ---------- | ---- |  |  |  | ---- |  |  |  |  | 
|                    |  |         |  |     |     |         |  |             |    |     |  |         |  |            |      |          |  |            |   |            |  |      |      |         |  | Percentage |      |  |  |  |      |  |  | 
|                    |  |         |  |     |     |         |  |             |    |     |  |         |  |            |      |          |  | Network    |   |            |  |      |      | of U.S. |  |            |      |  |  |  |      | 
|                    |  |         |  |     |     | Market  |  |             |    |     |  |         |  |            |      | Contract |  | Station    |   | television |  |      |      |         |  |            |      | 
|                    |  |         |  |     |     | Rank    |  |             |    |     |  | Network |  | Expiration |      | Rank     |  | households |   | Date       |  | Date
|Market              |  | Station |  | (1) |     | Channel |  | Affiliation |    | (2) |  | (3)     |  | (4)        |      | Formed   |  | Acquired  
|                    |  |         |  |     |     |         |  |             |    |     |  |         |  |            |      |          |  |           
|Louisville, KY      |  | WAVE-TV |  |     | 50  |         |  |             | 3  |     |  | NBC     |  |            | 2011 |          |  |            | 3 |            |  |      | 0.57 | %       |  |            | 1948 |  |  |  | 1981 | 
|Toledo, OH          |  | WTOL-TV |  |     | 69  |         |  |             | 11 |     |  | CBS     |  |            | 2014 |          |  |            | 1 |            |  |      | 0.40 |         |  |            | 1958 |  |  |  | 1965 | 
|Columbia, SC        |  | WIS-TV  |  |     | 84  |         |  |             | 10 |     |  | NBC     |  |            | 2011 |          |  |            | 1 |            |  |      | 0.33 |         |  |            | 1953 |  |  |  | 1953 | 
|Jackson, MS         |  | WLBT-TV |  |     | 90  |         |  |             | 3  |     |  | NBC     |  |            | 2011 |          |  |            | 1 |            |  |      | 0.30 |         |  |            | 1953 |  |  |  | 2000 | 
|Harlingen, TX       |  | KGBT-TV |  |     | 97  |         |  |             | 4  |     |  | CBS     |  |            | 2014 |          |  |            | 3 |            |  |      | 0.27 |         |  |            | 1955 |  |  |  | 1998 | 
|Evansville, IN      |  | WFIE-TV |  |     | 99  |         |  |             | 14 |     |  | NBC     |  |            | 2011 |          |  |            | 1 |            |  |      | 0.26 |         |  |            | 1953 |  |  |  | 1981 | 
|Tyler, TX           |  | KLTV-TV |  |     | 107 |         |  |             | 7  |     |  | ABC     |  |            | 2002 | *        |  |            | 1 |            |  |      | 0.24 |         |  |            | 1954 |  |  |  | 2000 | 
|Lufkin, TX          |  | KTRE-TV |  |     | 107 |         |  |             | 9  |     |  | ABC     |  |            | 2002 | *        |  |            | 1 |            |  |      | 0.24 |         |  |            | 1955 |  |  |  | 2000 | 
|(satellite of KLTV) |  |         |  |     |     |         |  |             |    |     |  |         |  |            |      |          |  |            |   |            |  |      |      |         |  |            |      |  |  |  |      |  |  |  |  | 
|Montgomery, AL      |  | WSFA-TV |  |     | 115 |         |  |             | 12 |     |  | NBC     |  |            | 2011 |          |  |            | 1 |            |  |      | 0.23 |         |  |            | 1959 |  |  |  | 1959 | 
|Wilmington, NC      |  | WWAY-TV |  |     | 142 |         |  |             | 3  |     |  | ABC     |  |            | 2005 |          |  |            | 2 |            |  |      | 0.14 |         |  |            | 1964 |  |  |  | 1998 | 
|Albany, GA          |  | WALB-TV |  |     | 145 |         |  |             | 10 |     |  | NBC     |  |            | 2011 |          |  |            | 1 |            |  |      | 0.14 |         |  |            | 1954 |  |  |  | 1998 | 
|Lubbock, TX         |  | KCBD-TV |  |     | 147 |         |  |             | 11 |     |  | NBC     |  |            | 2011 |          |  |            | 1 |            |  |      | 0.14 |         |  |            | 1953 |  |  |  | 2000 | 
|Biloxi, MS          |  | WLOX-TV |  |     | 156 |         |  |             | 13 |     |  | ABC     |  |            | 2004 |          |  |            | 1 |            |  |      | 0.12 |         |  |            | 1962 |  |  |  | 1995 | 
|Lake Charles, LA    |  | KPLC-TV |  |     | 175 |         |  |             | 7  |     |  | NBC     |  |            | 2011 |          |  |            | 1 |            |  |      | 0.09 |         |  |            | 1954 |  |  |  | 1986 | 
|Jonesboro, AR       |  | KAIT-TV |  |     | 179 |         |  |             | 8  |     |  | ABC     |  |            | 2004 |          |  |            | 1 |            |  |      | 0.08 |         |  |            | 1963 |  |  |  | 1986 | 



|*KLTV-TV and KTRE-TV have been operating under short term renewals of their
existing ABC affiliation contracts since their original expiration date in
2002. It is anticipated that new affiliation contract negotiations will be
completed and the Company will enter into long term contracts for these
stations sometime during 2004.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                        
|(1)                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                        
|(2)                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                        
|(3)                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                        
|(4)                                                                                                                                                                                                                                                                                                                                     

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The Company currently owns and operates fifteen network-affiliated
television stations in the South and Midwest, thirteen of which were ranked No.
1 or No. 2 in their markets based on Nielsen Media Research average 3 book
estimates (February, May, and November) 2003 ratings (Sun.  Sat.;
6:00A-2:00A). Eight of its stations are affiliated with NBC, five with ABC,
and two with CBS. The fifteen stations cover approximately 3.56% of U.S.
households.

The fifteen stations operate in designated market areas ranked 50 to 179.
All of the Companys stations are located in geographically diverse and growing
markets. Eleven of the fifteen stations are located in university centers.
Many of the stations are also located in markets that are home to a mixture of
large manufacturing plants, state capitals, transportation hubs, and United
States military bases. None of the TV markets represented more than 11% of the
revenues or 16% of operating income for the fiscal year ending December 31,
2003.

Since the sale of its insurance operations in 2000, the Company has
embarked on a program to leverage its scale as a group broadcaster through the
centralization of certain sales, business office and other operational
functions. It has installed new technology for accounting, traffic and
billing, and sales management, and created new centralized positions in
accounting, sales, and engineering, which allow it to perform certain functions
on an aggregated basis. In addition to the operational efficiencies gained,
the Company uses its leverage as an owner of fifteen television stations to
negotiate contracts for certain of the products and services used by its
stations on a group basis, rather than on an individual station-by-station
basis. The Company believes that it is able to negotiate more favorable terms
for the group as a whole for these products and services than it would on an
individual station-by-station basis. The Company continues to examine other
methods of realizing the benefits of the station group as a whole, and will
continue to further refine its operational structure and procedures as
additional opportunities are identified.

The Company also operates a cable advertising company, CableVantage, Inc.
(Cable Vantage), through which it represents eleven independent cable
operators in 20 locations that, in combination, reach nearly one half million
subscribers.

Network Affiliations

Each of the stations is affiliated with a major network. The NBC
affiliation contracts with each of the NBC affiliated stations have been
continuously in effect for over forty years. The CBS and ABC affiliation
contracts have each been continuously in effect for over thirty years.

The affiliation contracts provide that the network will offer to the
affiliated station a variety of network programs, for which the station has the
right of first refusal against any other television station located in its
community. The network typically retains the rights to sell a substantial
majority of the advertising time during such broadcasts. The major networks
typically provide programming for approximately 90 hours of the average 135
hours per week broadcast by their affiliated stations.

Historically, the networks have paid local stations, in accordance with
the terms of their network affiliation contracts, for airing network
programming. This is called network compensation. During 2001, the Company
completed negotiations with NBC regarding its network affiliation contracts,
and entered into a ten year agreement that calls for compensation payments from
NBC for the first five years and is compensation neutral thereafter. The
Company renegotiated its CBS network affiliation contracts during 2003, and
entered into a compensation neutral eleven year agreement. While the Company
is currently operating under the terms of its existing ABC network affiliation
contacts, it is anticipated that new affiliation contract negotiations will be
completed during 2004. At this time, it is not known what the exact outcome of
these negotiations will be; however, the Company does anticipate continuing its
relationship with the network.

Each network has the right to terminate its affiliation contract in the
event of a material breach of such agreement by a station and in certain other
circumstances.

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Sources of Television Operating Revenues

The following table shows the approximate percentage of the Companys
gross television station revenues by source for the three years ended December
31, 2003:

|                               |  |      |    |      |  |      |    |   |  |  |    |  
|------------------------------ |  | ---- | -- | ---- |  | ---- | -- | - |  |  | -- | -
|                               |  | 2003 |    | 2002 |  | 2001
|                               |  |      |    |      |  |     
|Local and regional advertising |  |      | 59 | %    |  |      | 55 | % |  |  | 61 | %
|National spot advertising      |  |      | 31 |      |  |      | 29 |   |  |  | 32 |  
|Network compensation           |  |      | 2  |      |  |      | 2  |   |  |  | 4  |  
|Political advertising          |  |      | 5  |      |  |      | 12 |   |  |  | 1  |  
|Other                          |  |      | 3  |      |  |      | 2  |   |  |  | 2  |  

Local and regional advertising is sold by each stations own sales
representatives to local and other non-national advertisers or agencies.
Generally, these contracts are short-term, although occasionally, longer-term
packages will be sold. National spot advertising (generally a series of spot
announcements between programs or within the stations own programs) is sold by
the station or its sales representatives directly to agencies representing
national advertisers. Most of these national sales contracts are also
short-term, often covering spot campaigns running for thirteen weeks or less.
Network compensation is the amount paid by the network to its affiliated
stations for broadcasting network programs. Political advertising is generated
by national and local elections, which can vary greatly from both market to
market and year to year.

A television stations rates are primarily determined by the estimated
number of television homes it can provide for an advertisers message. The
estimates of the total number of television homes in a market and of the
stations share of those homes are based on the Nielsen Media Research
industry-wide television rating service. The demographic make-up of the
viewing audience is equally important to advertisers. A stations rate card
for national and local advertisers takes into account, in addition to audience
delivered, such variables as the length of the commercial announcements and the
quantity purchased. Because television stations rely on advertising revenues,
they are sensitive to cyclical changes in the national and local economy. The
size of advertisers budgets, which are affected by broad economic trends,
affect the broadcast industry in general. The strength of the local economy in
each stations market also significantly impacts revenues. The advertising
revenues of the stations are generally highest in the second and fourth
quarters of each year, due in part to increases in consumer advertising in the
spring and retail advertising in the period leading up to and including the
holiday season. Additionally, advertising revenues in even-numbered years can
benefit from demand for advertising time in Olympic broadcasts and advertising
placed by candidates for political offices. A stations local market strength,
especially in local news ratings, is the primary factor that buyers use when
placing political advertising. From time to time, proposals have been advanced
in Congress to require television broadcast stations to provide some
advertising time to political candidates at no charge, which would potentially
reduce advertising revenues from political candidates.

The Company also has ancillary operations in cable advertising sales.
Revenues from these operations amount to $15.6 million, $16.2 million and $13.2
million for calendar years 2003, 2002, and 2001, respectively. The cable
advertising sales are generated by CableVantage, a marketing company designed
to assist local cable operators in the sale of commercial time available in
cable network programs. CableVantage was formed in 1994 to create business
opportunities with cable operators and build revenues from programs and
services specifically produced for cable.

Competition

The television broadcasting industry competes with other leisure time
activities for the time of viewers and with all other advertising media for
advertising dollars. Within its coverage area, a television station competes
with other stations and with other advertising media serving the same area. The
outcome of the competition among stations for advertising dollars in a market
depends principally on share of audience, advertising rates, and the
effectiveness of the sales effort.

The stations compete for television viewers against other local network
affiliated and independent stations, as well as against cable and alternate
methods of television transmission. The primary basis of this competition is
program popularity. A majority of daily programming is supplied by the network
with which each station is affiliated. In time periods in which the network
provides programming, stations are primarily dependent upon the performance of
the network programs in attracting viewers. Stations compete in non-network
time periods based on the performance of their programming during such time
periods, using a combination of self-produced news, public affairs, and other
entertainment programming, including syndicated programs, which the

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stations believe will be attractive to viewers. The Company believes that
its stations have strong competitive positions in their local markets, enabling
them to deliver a high percentage of the local television audience to
advertisers. The Companys commitment to local news programming is an
important element in maintaining its current market positions.

The competition includes cable television, which brings additional
television programming, including pay cable (HBO, Showtime, Movie Channel,
etc.), into subscribers homes in a television stations service area. Other
sources of competition include home entertainment systems (including video
cassette recorders and playback systems, videodiscs, and television game
devices), the Internet, multichannel multipoint distribution systems, wireless
cable, satellite master antenna television systems, and some low power in-home
satellite services. Stations also face competition from high-powered direct
broadcast satellite services, such as Echostar and Direct-TV, which transmit
programming directly to homes equipped with special receiving antennas.
Stations compete with these services both on the basis of service and product
performance (quality of reception and number of channels that may be offered)
and price (the relative cost to utilize these systems compared to broadcast
television viewing). The direct broadcast satellite companies have begun to
extend their services to those size markets in which Libertys stations
operate. Liberty has negotiated retransmission consents, including fee
payments based on the number of subscribers, with both Echostar and Direct-TV
for a number of its markets. By the end of 2004, Liberty expects that it will
have five stations receiving compensation from the direct broadcast satellite
companies in exchange for the right to use their signals.

Further advances in technology and further consolidation in the broadcast
industry may increase competition for household audiences and advertisers.
Video compression techniques, now in use with direct broadcast satellites and
in development for cable and wireless cable, are expected to permit greater
numbers of channels to be carried within existing bandwidth. These
technological developments, which are applicable to all video delivery systems
including over-the-air broadcasting, have the potential to allow additional
programming to highly targeted audiences. The ability to reach narrowly defined
audiences may further fragment viewers and influence advertiser spending. The
television broadcasting industry is continually faced with such technological
change and innovation. The Company is unable to predict the effect that
technological changes will have on the broadcast television industry in
general, or more specifically to its own operations. Consolidation in the
broadcast television industry introduces new, large competitors. Many of the
current and potential competitors have greater financial, marketing,
programming, and broadcasting resources than Liberty. The Company plans to
meet the challenge of a consolidating industry by continuing its growth
strategy and pursuing new synergistic opportunities.

Mandated Conversion to Digital Technology

Unless exempted by a specific FCC extension, all station affiliates of
ABC, CBS, NBC, FOX, and other non-affiliated commercially licensed stations
were required to transmit a digital signal on their approved channels by May 1,
2002. Many television stations, including some of the Companys, were granted
two six-month extensions for tower construction delays or equipment
unavailability. These extensions granted a delay in the deadline to May 1,
2003. Eleven of Libertys 15 stations were broadcasting their digital signals
by May 1, 2003. Four others received extensions because of FCC administrative
delays in processing requests for channel changes. One of the four remaining
stations is expected to be broadcasting a digital signal by May 1, 2004. One
other station is expected to be broadcasting its digital signal by the end of
2004. The remaining two stations may receive FCC approval of their channel
change request during 2004, and begin broadcasting their digital signal in
early 2005. Liberty expects no FCC penalties as a result of these
administrative delays.

As the Company develops its digital technology, given its dominant
presence in its markets, the Company believes it will be attractively
positioned as a potential partner for new digital or data stream businesses
that wish to develop in its markets. The Company has thus far invested $28
million in preparation for the transition to digital television, and estimates
that an additional $7 million may be required over the next 18 months for
towers, antenna systems, transmitters, transmitter buildings, and other related
equipment. This investment will establish basic full power digital television
pass through at our fifteen stations, including simulcasting existing analog
programming.

Federal Regulation of Broadcasting

The following is a brief discussion of certain provisions of the
Communications Act of 1934, as amended (the Communications Act), and of FCC
regulations and policies that affect the business operations of the Company.
Reference should be made to the Communications Act, FCC rules and the public
notices and rulings of the FCC, on which this discussion is based, for further
information concerning the nature and extent of FCC regulation of television
broadcasting stations.

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FCC Regulation.The ownership, operation, and sale of television stations
are subject to the jurisdiction of the FCC by authority granted it under the
Communications Act. The FCC has the power to impose penalties, including fines
or license revocations, upon a licensee of a television station for violations
of the FCCs rules and regulations. Matters subject to FCC oversight include,
but are not limited to:



| |  |  | the assignment of frequency bands of broadcast television;                                                                
| | - |  | --------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the approval of a television stations frequency, location, and operating power;                                          
|
| |  |  | the issuance, renewal, revocation or modification of a television stations FCC license;                                  
|
| |  |  | the approval of changes in the ownership or control of a television stations license;                                    
|
| |  |  | the regulation of equipment used by television stations; and                                                              
|
| |  |  | the adoption and implementation of regulations and policies
concerning the ownership and operation of television stations.

License Renewals, Assignments and Transfers.Television broadcast
licenses are granted for a maximum term of eight years (five years prior to
1996) and are subject to renewal upon application to the FCC. The FCC prohibits
the assignment of a license or the transfer of control of a broadcasting
licensee without prior FCC approval. In determining whether to grant or renew a
broadcasting license, the FCC considers a number of factors pertaining to the
applicant, including compliance with a variety of ownership limitations and
compliance with character and technical standards. During certain limited
periods when a renewal application is pending, petitions to deny a license
renewal may be filed by interested parties, including members of the public.
Such petitions may raise various issues before the FCC. The FCC is required to
hold evidentiary, trial-type hearings on renewal applications if a petition to
deny renewal of such license raises a substantial and material question of
fact as to whether the grant of the renewal application would be inconsistent
with public interest, convenience and necessity. The FCC must grant the renewal
application if, after notice and opportunity for a hearing, it finds that the
incumbent has served the public interest and has not committed any serious
violation of FCC requirements. If the incumbent fails to meet that standard,
and if it does not show other mitigating factors warranting a lesser sanction,
the FCC has authority to deny the renewal application and consider a competing
application. The Companys renewal applications have always been granted
without hearing for the full term.

Multiple and Cross-Ownership Rules. On a national level, the FCC rules
generally prevent an entity or individual from having an attributable interest
in television stations with an aggregate audience reach in excess of 39% of all
U.S. households. On a local level, the duopoly rule prohibits or restricts
attributable interests in two or more television stations with overlapping
service areas and the one-to-a-market rule restricts such interests in
television and radio stations serving the same market.

In 2003, the FCC released its bi-annual review of media ownership rules.
Under the new rules, the duopoly, one-to-a-market, and newspaper-television
cross-ownership prohibition rules were relaxed to allow broadcasters to own,
under certain circumstances, more than one television station, or certain
combinations of television stations, radio stations, and daily newspapers, in
the same local area.

Most broadcasters and many in Congress felt that the new rules were not
deregulatory enough, while consumer groups and others in Congress felt the
regulations had been liberalized too much. The result was that the new rules
were stayed while various interested parties asked the courts to intervene.
The Federal Appeals Court in Philadelphia won custody of the proceeding and is
expected to rule on the FCCs media ownership regulatory changes sometime in
2004.

The FCC generally applies its ownership limits only to attributable
interests held by an individual, corporation, partnership or other association.
In the case of corporations holding broadcast licenses, the interest of
officers, directors and those who, directly or indirectly, have the right to
vote 5% or more of the corporations voting stock (or 10% or more of such stock
in the case of insurance companies, mutual funds, bank trust departments, and
certain other passive investors that are holding stock for investment purposes
only) are generally deemed to be attributable, as are positions as an officer
or director of a corporate parent of a broadcast licensee.

In January of 2004, Congress passed an Omnibus Bill, which, among other
things, directed the FCC to set the national TV media ownership cap at 39%.
Specifically, a single entity may hold attributable interests in an unlimited
number of U.S. television stations, provided that those stations operate in
markets containing cumulatively no more than 39% of the

6



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television homes in the U.S. For this purpose, generally only 50% of the
television households in a market are counted towards the 39% national
restriction if the owned station is a UHF station. The television homes that
the Companys stations reach is well below the 39% national limit.

Because of these multiple and cross-ownership rules, a purchaser of the
common stock who acquires an attributable interest in the Company may violate
the FCCs rules if that purchaser also has an attributable interest in other
television stations, radio stations, daily newspapers, or cable systems,
depending on the number and location of those radio or television stations or
daily newspapers or cable systems. Such a purchaser also may be restricted in
the companies in which it may invest to the extent that those investments give
rise to an attributable interest. If an attributable stockholder of the Company
violates any of these ownership rules or if a proposed acquisition by the
Company would cause such a violation, the Company may be unable to obtain from
the FCC one or more authorizations needed to conduct its television station
business and may be unable to obtain FCC consents for certain future
acquisitions.

Alien Ownership.Under the Communications Act, broadcast licenses may not
be granted to or held by any corporation having more than one-fifth of its
capital stock owned of record or voted by non-U.S. citizens (including a
non-U.S. corporation), foreign governments or their representatives
(collectively, Aliens) or having an Alien as an officer or director. The
Communications Act also prohibits a corporation, without an FCC public interest
finding, from holding a broadcast license if that corporation is controlled,
directly or indirectly, by another corporation, any officer of which is an
Alien, or more than one-fourth of the directors of which are Aliens, or more
than one-fourth of the capital stock of which is owned of record or voted by
Aliens, unless the FCC finds that such ownership would be in the public
interest. The FCC has issued interpretations of existing law under which these
restrictions in modified form apply to other forms of business organizations,
including general and limited partnerships. As a result of these provisions,
since the Company serves as a holding company for the various television
station licensee subsidiaries, it cannot have more than 25% of the capital
stock owned of record or voted by Aliens, cannot have an officer who is an
Alien, and cannot have more than one fourth of its Board of Directors
consisting of Aliens.

Restrictions on Broadcast Advertising.The advertising of cigarettes on
broadcast stations has been banned for many years. The broadcast advertising of
smokeless tobacco products has also been banned by Congress. Certain
Congressional committees have, in the past, examined legislative proposals to
eliminate or severely restrict the advertising of beer and wine. The Company
cannot predict whether any or all of the present proposals will be enacted into
law and, if so, what the final form of such a law might be. The elimination of
all beer and wine advertising could have a material adverse effect on the
Companys revenues and operating profits as well as the revenues and operating
profits of other stations that carry beer and wine advertising. In recent
years, some television stations, including Liberty stations in selected
markets, have experimented with advertising for hard liquor products. In 2002,
NBC reversed a decision made a year earlier to take advertising for hard
liquor. Pressure from key members of Congress and various social activist
groups played a major role in NBCs decision. It is not possible for the
Company to predict how Congress might act legislatively in response to the
airing of hard liquor advertising.

The FCC has recently lifted its prohibition of broadcast advertising by
casinos in markets where the state does not have its own prohibition. The
Company has several stations in states where casino gambling is legal and no
such state prohibition exists.

In 2003, the United States Supreme Court reviewed and upheld a majority of
the portions of the Bipartisan Campaign Reform Act of 2002 that affected
broadcasters. The law mandates specific changes which could impact political
advertising. The new law will restrict the availability of soft money in
election campaigns; prevent organizations from using general revenues to fund
issue ads before elections; and require significant additional record-keeping
for television stations. The Company cannot say with certainty if or how the
volume of political spending will be impacted by the Courts ruling.

Cable and Satellite Must-Carry or Retransmission Consent Rights.The
1992 Cable Act, enacted in October 1992, requires television broadcasters to
make an election to exercise either certain must-carry or retransmission
consent rights in connection with their carriage by cable television systems
in the stations local market. If a broadcaster chooses to exercise its
must-carry rights, it may demand carriage on a specified channel on cable
systems within its designated market area. Must-carry rights are not absolute,
and their exercise is dependent on variables such as the number of activated
channels on, and the location and size of, the cable system, and the amount of
duplicative programming on a broadcast station. Under certain circumstances, a
cable system may decline to carry a given station. If a broadcaster chooses to
exercise its retransmission consent rights, it may prohibit cable systems from
carrying its signal, or permit carriage under

7



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##### 



a negotiated compensation arrangement. Generally, the stations have
requested must-carry status from the cable operators in their outlying coverage
areas and have negotiated retransmission consent agreements with the cable
operators in their metro coverage areas. Certain of the Companys stations are
currently in negotiation with various cable television systems to extend their
retransmission agreements. At this time, it is not known what the exact
outcome of these negotiations will be. However, the Company does not
anticipate encountering any significant difficulties during this process.

Cable operators are not currently required to carry both a stations
analog and digital signal at the same time. However, it is anticipated that
the Company will eventually be able to negotiate the retransmission of both its
analog and digital signals with the cable television systems in its markets.

Under the Satellite Home Improvement Act, satellite carriers are permitted
to retransmit a local television stations signal into its local market with
the consent of the local television station. If a satellite carrier elects to
carry one local station in a market, the satellite carrier must carry the
signals of all local television stations that also request carriage.

Advanced Television Technology.At present, U.S. television stations
broadcast signals using the NTSC system, an analog transmission system named
for the National Television Systems Committee, an industry group established in
1940 to develop the first U.S. television technical broadcast standards. In
late 1996, the FCC approved a new digital television (DTV) technical standard
to be used by television broadcasters, television set manufacturers, the
computer industry, and the motion picture industry. This DTV standard will
allow the simultaneous transmission of multiple streams of video programming
and data on the bandwidth presently used by a single normal analog channel.

The FCC presently plans for the DTV transition period to end by 2006, or
upon 85% market penetration of DTV sets. At that time, broadcasters will be
required to discontinue analog operations and to return their present channels
to the FCC. Given that the penetration of DTV sets in 2006 will likely be
below the threshold Congress has set for returning the analog spectrum, it is
probable that broadcasters will continue to utilize both analog and digital
spectrum beyond 2006.

The FCC is expected to apply to DTV certain of the rules applicable to
analogous services in other contexts, including certain rules that require
broadcasters to serve the public interest, and may seek to impose additional
programming or other requirements on DTV service. The Telecom Act requires the
FCC to impose fees upon broadcasters if they choose to use the DTV channel to
provide paid subscription services to the public. The FCC has determined that
broadcasters should pay a fee of 5% of gross revenues received for such
subscription services should the broadcaster provide subscription services on
their DTV channels.

In some cases, conversion to DTV operations may reduce a stations
geographical coverage area. In addition, the FCCs current implementation plan
would maintain the secondary status of low-power stations in connection with
its allotment of DTV channels. The DTV channel allotment will result in
displacement of a substantial number of existing low-power stations,
particularly in major television markets. Accordingly, the low-power broadcast
stations may be materially adversely affected. The Company does not currently
own any low-power stations.

Recent Developments, Proposed Legislation, and Regulation.Congress and
the FCC currently have under consideration, and may in the future adopt, new
laws, regulations, and policies regarding a wide variety of matters that could
affect, directly or indirectly, the operation and ownership of the Companys
broadcast properties. In addition to the changes and proposed changes noted
above, these matters include, for example, additional spectrum use fees,
political advertising rates, potential restrictions on the advertising of
certain products like hard liquor, beer and wine, and revised rules and
policies governing equal employment opportunity. Other matters that could
affect its broadcast properties include technological innovations and
development generally affecting competition in the mass communications
industry.

The foregoing does not purport to be a complete summary of all the
provisions of the Communications Act, the Telecom Act, or the regulations and
policies of the FCC under either act. Proposals for additional or revised
regulations and requirements are pending before and are being considered by
Congress and federal regulatory agencies from time-to-time. Management is
unable at this time to predict the outcome of any of the pending FCC rulemaking
proceedings referenced above, the outcome of any reconsideration or appellate
proceedings concerning any changes in FCC rules or policies noted above, the
possible outcome of any proposed or pending Congressional legislation, or the
impact of any of those changes on its broadcast operations.

Other Business.In addition to the operating subsidiaries, the Company
has other minor organizations. These include the Companys administrative
staff, a property development and management company, and transportation
operations.

8



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##### 



Industry Segment Data.Information concerning the Companys industry
segments is contained in the Notes to the Consolidated Financial Statements on
page 30 of this report and is incorporated in this Item 1 by reference.

Employees.At December 31, 2003 the Company had approximately 1,500
employees.

Internet Address.The Company maintains its Internet website at
www.libertycorp.com. The Company makes available free of charge through its
Internet website, or upon written request, its annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to
those reports, its Code of Ethics, any amendments or waivers to its Code of
Ethics, its Corporate Governance Policy, and all Board Committee charters.

Item 2. Properties

The Company leases the space for its main office, which is located at 135
South Main Street, Greenville, SC.

The Company owns its television broadcast studios, office buildings and
transmitter sites in Columbia, SC; Montgomery, AL; Toledo, OH; Louisville, KY;
Evansville, IN; Jonesboro, AR; Lake Charles, LA; Biloxi, MS; Albany, GA;
Harlingen, TX; Lubbock, TX; Wilmington, NC; Jackson, MS; Tyler, TX; and Lufkin,
TX.

Item 3. Legal Proceedings

The Company is not currently engaged in legal proceedings of material
consequence other than ordinary routine litigation incidental to its business.
Any proceedings reported in prior filings have been settled or otherwise
satisfied.

Item 4. Submission of Matters to a Vote of Shareholders

None during the fourth quarter of 2003.

9



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##### 



PART II

Item 5. Market for the Registrants Common Stock and Related Security Stockholder Matters

The Liberty Corporations Common Stock is listed on the New York Stock
Exchange under the symbol LC. As of December 31, 2003, 878 shareholders of
record in 39 states, the District of Columbia, Australia, and Canada held the
18,930,500 Common Stock shares outstanding. Quarterly high and low stock prices
and dividends per share as reported by New York Stock Exchange Composite Price
History were:

|               |  |                        |  |          |  |                        |  |          |       |                        |  |           |       |      |  |           |      |           |  |   |       |  |  |   |       |           |  |   |      | 
|-------------- |  | ---------------------- |  | -------- |  | ---------------------- |  | -------- | ----- | ---------------------- |  | --------- | ----- | ---- |  | --------- | ---- | --------- |  | - | ----- |  |  | - | ----- | --------- |  | - | ---- | 
|               |  | 2003                   |  | 2002     |  | 2001                  
|               |  |                        |  |          |  |                       
|               |  |                        |  |          |  | Quarterly              |  |          |       |                        |  |           |       |      |  | Quarterly |      |           |  |   |       |  |  |   |       | Quarterly
|               |  | Market Price Per Share |  | Dividend |  | Market Price Per Share |  | Dividend |       | Market Price Per Share |  | Dividend 
|               |  | High                   |  | Low      |  | Per Share              |  | High     |       | Low                    |  | Per Share |       | High |  | Low       |      | Per Share
|               |  |                        |  |          |  |                        |  |          |       |                        |  |           |       |      |  |           |      |          
|Fourth Quarter |  | $47.25                 |  | $41.89   |  | $0.24                  |  | $        | 40.50 |                        |  | $         | 32.10 |      |  | $         | 0.22 |           |  | $ | 44.25 |  |  | $ | 39.00 |           |  | $ | 0.22 | 
|Third Quarter  |  | 45.00                  |  | 40.91    |  | 0.24                   |  |          | 40.08 |                        |  |           | 28.50 |      |  |           | 0.22 |           |  |   | 42.00 |  |  |   | 38.45 |           |  |   | 0.22 | 
|Second Quarter |  | 45.30                  |  | 40.46    |  | 0.24                   |  |          | 45.00 |                        |  |           | 39.00 |      |  |           | 0.22 |           |  |   | 40.00 |  |  |   | 33.80 |           |  |   | 0.22 | 
|First Quarter  |  | 43.60                  |  | 37.85    |  | 0.24                   |  |          | 42.51 |                        |  |           | 39.20 |      |  |           | 0.22 |           |  |   | 42.32 |  |  |   | 33.25 |           |  |   | 0.22 | 

The Company expects to continue its policy of paying regular cash
dividends, although there is no assurance as to future dividends, as they are
dependent on future earnings, capital requirements and the Companys financial
condition.

Registrar and Transfer Agent
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
Telephone (800) 937-5449, extension 6820

For a free copy of the 10-K or other information, contact:
The Liberty Corporation Shareholder Relations
Box 502
Greenville, SC 29602
Telephone (864) 241-5400

Written shareholder correspondence and requests for transfer should be sent to:
American Stock Transfer & Trust Company
Attn: Shareholder Relations
6201 15th Avenue, Floor 3L
Brooklyn, NY 11219

Dividend Reinvestment and Direct Stock Purchase and Sale Plan
A brochure describing this service may be obtained by writing or calling:
American Stock Transfer & Trust Company
P.O. Box 922
New York, NY 10269-0560
Telephone: (877) 322-4926 (toll free)
Internet: WWW.investpower.com

Direct Deposit of Cash Dividends
For information on this service, call American Stock Transfer &
Trust Company toll free at 800-937-5449, extension 6820

Equity Compensation Plan Information

|                                                           |       |     |                            |           |                      |     |                           |       |  |  |                         |         | 
|---------------------------------------------------------- | ----- | --- | -------------------------- | --------- | -------------------- | --- | ------------------------- | ----- |  |  | ----------------------- | ------- | 
|                                                           |       |     |                            |           |                      |     |                           |       |  |  | Number of Securities   
|                                                           |       |     |                            |           |                      |     |                           |       |  |  | Remaining Available For
|                                                           |       |     | Number of Securities To Be |           | Weighted-Average     |     | Future Issuance Under    
|                                                           |       |     | Issued Upon Exercise of    |           | Exercise Price of    |     | Equity Compensation Plans
|                                                           |       |     | Outstanding Options,       |           | Outstanding Options, |     | (Excluding Securities    
|                                                           |       |     | Warrants, and Rights       |           | Warrants, and Rights |     | Reflected in Column(a))  
|Plan Category                                              |       | (a) |                            | (b)       |                      | (c)
|                                                           |       |     |                            |           |                      |    
|Equity compensation
plans approved by
security holders     |       |     | 1,034,210                  |           |                      | $   | 35.09                     |       |  |  | 669,138                 |        
|Equity compensation
plans not approved
by security holders |       |     |                           |           |                      |     | N/A                       |       |  |  | N/A                     |        
|                                                           |       |     |                            |           |                      |     |                           |       |  |  |                         |        
|                                                           | Total |     |                            | 1,034,210 |                      |     | $                         | 35.09 |  |  |                         | 669,138 | 
|                                                           |       |     |                            |           |                      |     |                           |       |  |  |                         |        

10



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##### 



Item 6. Selected Financial Data

|                                                                           |  |                          |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|-------------------------------------------------------------------------- |  | ------------------------ | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                                           |  | Years Ended December 31,
|                                                                           |  |                         
|(In $000s, except per share data)                                         |  | 2003                     |         | 2002 |  | 2001 |         | 2000 |  | 1999
|                                                                           |  |                          |         |      |  |      |         |      |  |     
|Net revenues *                                                             |  | $                        | 200,284 |      |  | $    | 206,678 |      |  | $    | 178,431 |  |  | $ | 173,672 |  |  | $ | 154,000 | 
|Income from continuing operations                                          |  | $                        | 23,897  |      |  | $    | 32,995  |      |  | $    | 16,576  |  |  | $ | 24,995  |  |  | $ | 18,630  | 
|Income from discontinued operations**                                      |  |                          |        |      |  |      |        |      |  |      |        |  |  |   | 28,563  |  |  |   | 25,939  | 
|Cumulative effect of a change in accounting
principle***                   |  |                          |        |      |  |      | (47,388 | )    |  |      |        |  |  |   |        |  |  |   |        | 
|                                                                           |  |                          |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Net income (loss)                                                          |  | $                        | 23,897  |      |  | $    | (14,393 | )    |  | $    | 16,576  |  |  | $ | 53,558  |  |  | $ | 44,569  | 
|                                                                           |  |                          |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Adjusted net income (loss)****                                             |  | $                        | 23,897  |      |  | $    | 32,995  |      |  | $    | 25,947  |  |  | $ | 57,715  |  |  | $ | 46,842  | 
|                                                                           |  |                          |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Income from continuing operations per diluted share                        |  | $                        | 1.24    |      |  | $    | 1.68    |      |  | $    | 0.84    |  |  | $ | 1.27    |  |  | $ | 0.91    | 
|Income from discontinued operations per diluted share                      |  |                          |        |      |  |      |        |      |  |      |        |  |  |   | 1.45    |  |  |   | 1.34    | 
|Cumulative effect of a change in accounting
principle per diluted share*** |  |                          |        |      |  |      | (2.41   | )    |  |      |        |  |  |   |        |  |  |   | --      | 
|                                                                           |  |                          |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Net income (loss) per diluted share                                        |  | $                        | 1.24    |      |  | $    | (0.73   | )    |  | $    | 0.84    |  |  | $ | 2.72    |  |  | $ | 2.25    | 
|                                                                           |  |                          |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Adjusted net income per diluted share****                                  |  | $                        | 1.24    |      |  | $    | 1.68    |      |  | $    | 1.32    |  |  | $ | 2.93    |  |  | $ | 2.42    | 
|                                                                           |  |                          |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Dividends per common share                                                 |  | $                        | 0.96    |      |  | $    | 0.88    |      |  | $    | 0.88    |  |  | $ | 0.88    |  |  | $ | 0.88    | 
|Assets                                                                     |  | $                        | 662,265 |      |  | $    | 670,751 |      |  | $    | 730,195 |  |  | $ | 896,007 |  |  | $ | 858,302 | 
|Notes, mortgages and other debts                                           |  |                          |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  | $ | 234,000 | 
|Shareholders equity                                                       |  | $                        | 522,000 |      |  | $    | 538,236 |      |  | $    | 581,671 |  |  | $ | 580,993 |  |  | $ | 554,224 | 

|     |  |                                                                                                                                                                                                                                              
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*    |  | During 2000, the Company acquired four television stations located in Texas
and Mississippi.                                                                                                                                                 
|     |  |                                                                                                                                                                                                                                              
|**   |  | In November of 2000, the Company sold it insurance operations.                                                                                                                                                                               
|     |  |                                                                                                                                                                                                                                              
|***  |  | See Note 4 of the Consolidated Financial Statements regarding the
cumulative effect of a change in accounting principle related to the adoption
of Statement of Financial Accounting Standards No. 142 Goodwill and Other
Intangible Assets
|     |  |                                                                                                                                                                                                                                              
|**** |  | Includes adjustments to reflect the effect of Statement of Financial
Accounting Standards No. 142 had it been effective as of January 1, 1999.                                                                                               

Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

The Liberty Corporation is a holding company with operations primarily in
the television broadcasting industry. The Companys television broadcasting
subsidiary, Cosmos Broadcasting, consists of fifteen network-affiliated
television stations principally located in the Southeast and Midwest, a cable
advertising company, and a professional broadcast equipment dealership. Eight
of the Companys television stations are affiliated with NBC, five with ABC,
and two with CBS.

FORWARD-LOOKING INFORMATION

The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. Certain information contained herein
or in any other written or oral statements made by, or on behalf of the
Company, are or may be viewed as forward-looking. The words expect,
believe, anticipate or similar expressions identify forward-looking
statements. Although the Company has used appropriate care in developing any
such forward-looking information, forward-looking information involves risks
and uncertainties that could significantly impact actual results. These risks
and uncertainties include, but are not limited to, the following: changes in
national and local markets for television advertising; changes in general
economic conditions, including the performance of financial markets and
interest rates; competitive, regulatory, or tax changes that affect the cost of
or demand for the Companys services; and adverse litigation results. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
developments, or otherwise.

11



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EXECUTIVE SUMMARY

While net revenues were down approximately $6.4 million on a
year-over-year basis, a decrease in net revenues was expected for 2003. There
were record amounts of political spending during 2002, with the Company
realizing $27.3 million of revenue from political spending in that year. The
year 2003 was an off-cycle year for national elections, and as such, lower
political revenues were to be expected. Increases in national and local
revenue helped offset the impact of the lower level of political revenue in
2003. Operating expenses increased, due mainly to planned employee costs and
the training and expenses associated with the installation of new traffic and
billing software at the Companys television stations, coupled with a change in
the accounting estimate of the useful lives used to account for certain
equipment.

During 2003, the Company had capital expenditures of approximately $22.0
million and repurchased $26.6 million of its common stock. At December 31,
2003, the Company had cash and cash equivalents of approximately $62.2 million
and no debt outstanding. No amounts were drawn on the Companys $100 million
credit facility during 2003.

Subsequent to December 31, 2003, the Company renewed the credit facility
extending its maturity date to May 18, 2005. Also subsequent to December 31,
2003, the Companys Board of Directors declared a special dividend of $4.00 per
share, or approximately $75.7 million. The Company may use a portion of its
$100 million credit facility to fund a portion of the special dividend.

SIGNIFICANT ACCOUNTING POLICIES AND ASSUMPTIONS

Financial statements prepared in accordance with accounting principles
generally accepted in the United States require management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes to the consolidated financial statements.
Actual results could differ from those estimates and assumptions.

Some of the more significant, and the most sensitive, of the Companys
accounting policies and assumptions relate to the consolidation of variable
interest entities, as governed by Financial Accounting Standards Board
Interpretation 46 (FIN 46), the procedures the Company uses to value its FCC
licenses and Goodwill in accordance with Statement of Financial Accounting
Standards No. 142 Goodwill and Other Intangible Assets (SFAS No. 142), the
procedures to evaluate certain of its investments for impairment, and the
assumptions used to determine the recoverability of deferred tax assets.

FIN 46 requires the Company to use estimates and assumptions to determine
if an investment or other relationship with a third party qualifies as a
variable interest entity, and if it does qualify, to determine if that entity
should be consolidated into the Companys financial statements. The estimates
include, among other things, the future cash flows of the third party, terminal
multiples for assumed liquidation values, and discount rates to be used in
present value calculations.

SFAS No. 142 requires the Company to use estimates and assumptions to
determine the estimated fair value of its individual stations and its station
group as a whole. The estimates and assumptions include, among other things,
the future cash flows to be generated by its stations, terminal multiples for
assumed station sales, discount rates to be used in present value calculations,
assumed values for fixed assets and network affiliation contracts, and future
capital expenditure levels.

The Company establishes impairments on specific assets at the time the
company determines the assets to have been impaired. In performing this
determination, management utilizes mathematical models, market information, and
valuation information supplied by investee companies to determine if an
impairment exists. Changes in market conditions or the valuations of the
investee companies could change the outcome of the Companys judgments
regarding the future impairment of its investments.

Deferred tax assets and liabilities are based on estimated timing
differences between the book and tax basis of certain assets and liabilities.
These estimates may be affected by future changes in enacted tax legislation
and the results of regulatory review. Realization of deferred tax assets is
principally dependent upon the achievement of projected future taxable income.
The Companys judgments regarding future profitability may change due to future
market conditions, among other factors.

Please see Note 2 to the Consolidated Financial Statements for information
relating to other less sensitive accounting policies and estimates used by the
Company.

12



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##### 



SEASONALITY OF TELEVISION REVENUES

The Companys revenues are usually subject to seasonal fluctuations. The
advertising revenues of the stations are generally highest in the second and
fourth quarter of each year, due in part to increases in consumer advertising
in the spring and retail advertising in the period leading up to and including
the holiday season. Additionally, advertising revenues in even-numbered years
tend to be higher, as they benefit from advertising placed by candidates for
political offices and demand for advertising time in Olympic broadcasts.

From time to time, proposals have been advanced in the U.S. Congress and
at the FCC to require television broadcast stations to provide advertising time
to political candidates at no or reduced charge, which would eliminate, in
whole or in part, advertising revenues from political candidates.

SUMMARY OF CONSOLIDATED RESULTS

The Year 2003 Compared With 2002

|                                      |  |      |         |      |  |        |         |   |  |   |         |  
|------------------------------------- |  | ---- | ------- | ---- |  | ------ | ------- | - |  | - | ------- | -
|(In $000s)                           |  | 2003 |         | 2002 |  | Change
|                                      |  |      |         |      |  |       
|National                              |  | $    | 67,045  |      |  | $      | 64,174  |   |  | $ | 2,871   |  
|Local and regional                    |  |      | 127,233 |      |  |        | 122,542 |   |  |   | 4,691   |  
|Political                             |  |      | 10,657  |      |  |        | 27,299  |   |  |   | (16,642 | )
|Network                               |  |      | 4,229   |      |  |        | 4,324   |   |  |   | (95     | )
|Other broadcasting                    |  |      | 7,097   |      |  |        | 6,260   |   |  |   | 837     |  
|                                      |  |      |         |      |  |        |         |   |  |   |         |  
|Gross station revenues                |  |      | 216,261 |      |  |        | 224,599 |   |  |   | (8,338  | )
|Agency commissions                    |  |      | (31,625 | )    |  |        | (34,147 | ) |  |   | 2,522   |  
|                                      |  |      |         |      |  |        |         |   |  |   |         |  
|Station revenues (net of commissions) |  |      | 184,636 |      |  |        | 190,452 |   |  |   | (5,816  | )
|Cable and other (net of commissions)  |  |      | 15,648  |      |  |        | 16,226  |   |  |   | (578    | )
|                                      |  |      |         |      |  |        |         |   |  |   |         |  
|Net revenues                          |  | $    | 200,284 |      |  | $      | 206,678 |   |  | $ | (6,394  | )
|                                      |  |      |         |      |  |        |         |   |  |   |         |  

Net revenues for the year ended December 31, 2003 were $200.3 million, a
decrease of $6.4 million from the $206.7 million reported for 2002. Net
station revenues were $184.6 million for 2003, a decrease of $5.8 million from
the $190.5 million reported for 2002. The most significant component of the
decrease in revenues is related to the lower levels of political revenue in
2003 as compared to 2002, as discussed below.

National revenue increased $2.9 million on a year-over-year basis due
mainly to increases in automotive advertising by the auto manufacturers. Local
and regional advertising was up $4.7 million, due mainly to increases in
automotive advertising by local auto dealerships and increases in healthcare
and retail advertising. Political revenue for 2003 was $10.7 million as
compared to $27.3 million in 2002. The year 2002 was a national election year
and had record political revenues, as soft money was expected to be banned
following that election cycle, and political support groups employed a use it
or lose it philosophy.

Operating expenses (including the amortization of program rights)
increased $5.6 million from 2002, or five percent. The broadcasting segments
operating expenses were $115.8 million for 2003, an increase of $6.1 million
over the $109.7 million reported for 2002. The increase in operating expenses
is mainly attributable to increases in medical costs, planned annual increases
in employee compensation, training and travel related to the installation of
new traffic and billing software, and net losses on the disposal of fixed
assets. During the year, a significant portion of the Companys DTV equipment
came on line, and significant amounts of other equipment were upgraded to
digital. The new equipment and upgrades necessitated the retirement of a
number of assets that were not yet fully depreciated. In addition, during the
fourth quarter of 2003 the Company recorded a charge of $0.7 million related to
a change in the estimates of the useful lives used to account for back-up and
redundant equipment. The new estimates resulted in the retirement of all
assets that had not been utilized in the last twelve to twenty-four months.
This early retirement of assets and the changes in accounting estimates
resulted in $2.2 million of net losses on disposal during 2003.

Depreciation and amortization was $18.5 million for the year ended
December 31, 2003, an increase of $0.7 million from the $17.8 million reported
for 2002. The increase in depreciation expense is partially attributable to
the depreciation recorded on the DTV equipment that came on line during 2002
and 2003.

13



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##### 



Corporate, general, and administrative expenses were $14.4 million for the
year ended December 31, 2003, an increase of $0.9 million over the $13.5
million reported for 2002. Reductions in workers compensation expenses and
legal and other professional fees were offset by higher directors and
officers insurance premiums and onetime charges related to the wind up of
contract obligations with the Companys previous traffic and billing software
vendor. During the fourth quarter of 2003, the Company negotiated an exit from
the contract with its previous software vendor, making a payment of
approximately $0.4 million in satisfaction of a portion of the remaining term
of the contract.

Net investment income for 2003 was a loss of $0.3 million, as compared to
a gain of $0.6 million in 2002. Interest earned on cash balances and notes
receivable was offset by impairments in the Companys venture capital, and
strategic investment portfolios. During the year the Company reduced the
carrying amounts of certain investments in its venture capital portfolio based
on fair value information provided by the investment funds managers, and in
its strategic investment portfolio based on an investee company receiving a
going concern opinion on its 2002 audited financial statements.

The effective tax rate was 37.5% for both 2003 and 2002.

The Year 2002 Compared With 2001

|                                      |  |      |         |      |  |        |         |   |  |   |        |  
|------------------------------------- |  | ---- | ------- | ---- |  | ------ | ------- | - |  | - | ------ | -
|(In $000s)                           |  | 2002 |         | 2001 |  | Change
|                                      |  |      |         |      |  |       
|National                              |  | $    | 64,174  |      |  | $      | 61,476  |   |  | $ | 2,698  |  
|Local and regional                    |  |      | 122,542 |      |  |        | 118,034 |   |  |   | 4,508  |  
|Political                             |  |      | 27,299  |      |  |        | 1,957   |   |  |   | 25,342 |  
|Network                               |  |      | 4,324   |      |  |        | 7,894   |   |  |   | (3,570 | )
|Other broadcasting                    |  |      | 6,260   |      |  |        | 3,172   |   |  |   | 3,088  |  
|                                      |  |      |         |      |  |        |         |   |  |   |        |  
|Gross station revenues                |  |      | 224,599 |      |  |        | 192,533 |   |  |   | 32,066 |  
|Agency commissions                    |  |      | (34,147 | )    |  |        | (27,322 | ) |  |   | (6,825 | )
|                                      |  |      |         |      |  |        |         |   |  |   |        |  
|Station revenues (net of commissions) |  |      | 190,452 |      |  |        | 165,211 |   |  |   | 25,241 |  
|Cable and other (net of commissions)  |  |      | 16,226  |      |  |        | 13,220  |   |  |   | 3,006  |  
|                                      |  |      |         |      |  |        |         |   |  |   |        |  
|Net revenues                          |  | $    | 206,678 |      |  | $      | 178,431 |   |  | $ | 28,247 |  
|                                      |  |      |         |      |  |        |         |   |  |   |        |  

Net revenues were $206.7 million for the year ended December 31, 2002, an
increase of $28.2 million over the $178.4 million reported for 2001. Net
station revenues were $190.5 million for 2002, an increase of $25.2 million
over the $165.2 million reported for 2001.

National revenue was up four percent on a year-over-year basis due mainly
to increases in automotive advertising by the large auto manufacturers. Local
and regional advertising was up four percent on a year-over-year basis due
mainly to increases in automotive advertising by local auto dealerships and
increases in the fast food category. Political revenue was $27.3 million in
2002 versus $2.0 million in 2001. Political revenue was up in 2002, as it was
a Congressional election year and a majority of the Companys stations are the
leading news providers in their markets. Due to their ability to deliver
significant numbers of viewers, they are attractive vehicles for political
candidates to use to inform the public of their campaign messages. Network
revenues were down 45 percent on a year-over-year basis, as a majority of the
Companys stations began operating under new network contracts during the
second half of 2001.

Cable and other revenues were $16.2 million for the year ended December
31, 2002, an increase of $3.0 million over the $13.2 million reported for 2001.
The increase in cable and other revenues is due to political revenue in 2002
that was not present in 2001, generally stronger advertising environments in
several markets, and startup operations at certain locations in the previous
year being fully operational during 2002.

Operating expenses (including the amortization of program rights) were
$123.3 million for the year ended December 31, 2002, an increase of $11.3
million over the $112.0 million reported for 2001. The broadcasting segments
operating expenses were $109.7 million for 2002, an increase of $9.3 million
over the $100.4 million reported for 2001. The increase in operating expenses
is mainly attributable to higher levels of sales commissions as a result of the
increased revenue base, accruals for performance based compensation in 2002
that were not present during 2001, and increased personnel costs related to the
addition of nightly and weekend news casts at one of the Companys stations,
along with

14



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##### 



annual salary increases across the Company. Cable operating
expenses were $12.9 million for 2002, an increase of $1.5 million over the
$11.4 million reported for 2001. The increase in cable advertising
operating expenses is attributable mainly to increased commissions as a result
of the increased revenue base, along with the addition of personnel during the
year as start up operations at certain locations in the previous year became
fully operational during 2002.

Depreciation and amortization was $17.8 million for the year ended
December 31, 2002, a decrease of $14.2 million from the $32.0 million reported
for 2001. During the first quarter of 2002, the Company adopted SFAS No. 142
Goodwill and Other Intangible Assets. SFAS No. 142 requires that goodwill
and certain other identified intangibles no longer be amortized to earnings,
but instead be reviewed for impairment. Had SFAS No. 142 been effective as of
the beginning of the first quarter of 2001, reported depreciation and
amortization expenses would have been approximately $16.9 million. (See Note 4
of the accompanying Notes to Consolidated Financial Statements for further
details.)

Corporate, general, and administrative expenses were $13.5 million for the
year ended December 31, 2002, an increase of $1.7 million over the $11.8
million reported for 2001. The increase in corporate, general, and
administrative expenses is due to accruals for performance based compensation
in 2002 that were not present during 2001, and the non-capitalizable portion of
expenses related to the implementation of new accounting systems.

Net investment income was $0.6 million for the year ended December 31,
2002, a decrease of $3.5 million from the $4.1 million reported for 2001. Net
investment income during 2002 was comprised mainly of interest earned on cash
balances and venture capital distributions, offset by non-cash impairment
charges in the Companys venture capital portfolio. Net investment income
during 2001 was comprised of significantly higher interest income (due to the
interest earned during the first quarter of that year on the large cash balance
related to the then as yet unpaid income taxes on the sale of the insurance
operations), along with venture capital distributions and gains on the sale of
stock in the Companys equity portfolio, offset by impairments taken in the
Companys venture capital portfolio.

The effective tax rate was 37.5% and 38.0% for 2002 and 2001,
respectively.

INVESTMENTS

During the year ended December 31, 2003, the Company had net investment
losses of $0.3 million. Interest earned on cash balances and notes receivable
was offset by impairments in the Companys venture capital, and strategic
investment portfolios. During 2003, the Company reduced the carrying amounts
of certain investments in its venture capital portfolio based on fair value
information provided by the investment funds managers, and in its strategic
investment portfolio based on an investee company receiving a going concern
opinion on its 2002 audited financial statements. At December 31, 2003, other
long-term investments, included in the caption investments and other assets
on the balance sheet, was comprised of approximately 26% private equity
securities, 37% private debt securities, 6% real estate related investments,
13% venture capital limited partnerships, and 18% low income housing tax
credits and other investments.

The Company has determined that it is not practicable to estimate the fair
values of its private equity, venture capital, and low income housing tax
credit investments because of a lack of primary and secondary market prices and
the inability to estimate fair values without incurring excessive costs. Fair
values for private debt securities are estimated by discounting the expected
future cash flows using a current market rate applicable to the yield, credit
quality, and maturity of the investments. Further discussion of investments
and valuation is contained in Notes 5 and 13 to the Consolidated Financial
Statements.

LIQUIDITY AND CAPITAL RESOURCES

The Companys short-term cash needs consist primarily of working capital
requirements, expenditures associated with the initial implementation of DTV
broadcast operations, regular quarterly dividends to shareholders, and special
dividends to shareholders, if and when declared by the Companys Board of
Directors. Historically, Libertys operations have provided sufficient
liquidity to fund the operations of the Company and its regular quarterly
dividends. While exact costs are not presently known, the additional capital
expenditures required over the next eighteen months to comply with the FCC
mandated DTV implementation are anticipated to be approximately $7 million. On
February 3, 2004, the Companys Board of Directors declared a special dividend
of $4.00 per share, or approximately $75.7 million. It is anticipated that the
Company will use a portion of its $100 million credit facility to fund some or
all of the special dividend.

The Companys primary long-term cash need is the possible need for capital
should the Company identify an appropriate acquisition opportunity.

15



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##### 



On a consolidated basis, Libertys net cash provided by operating
activities was $61.7 million for 2003, compared to $91.8 million for 2002, and
cash used in operating activities of $75.5 million in 2001. The decrease in
cash provided by
operating activities in 2003 is due mainly to the lower level of revenues
from political advertising in 2003 as compared to 2002 and effect of deferred
taxes in 2002. The increase in cash provided by operating activities for 2002
as compared to 2001 relates to the payment in 2001 of approximately $132
million of income taxes related to the sale of the Companys insurance
operations. Excluding the impact of the income taxes paid related to that
sale, adjusted net cash provided by operations was $52.8 million in 2001. The
increase in cash provided by operating activities in 2002 as compared to the
adjusted 2001 cash provided by operating activities is due mainly to the
increase in revenues during 2002.

Libertys net cash used in investing activities was $24.0 million in 2003
compared to $27.7 million in 2002 and $20.8 million in 2001. The decrease in
net cash used in investing activities in 2003 is due to lower levels of net
investing activity. During 2003, the Company made $5.9 million of strategic
investments, as compared to $13.1 million in 2002. The strategic investments
made during 2003 were mainly follow-on investments in the Companys existing
strategic investment portfolio. The increase in net cash used in investing
activities from 2001 to 2002 was due mainly to increased capital expenditures
related to the Companys conversion to digital television broadcasting.

Cash flow used in financing activities for 2003 was $43.4 million versus
$31.6 million and $17.2 million in 2002 and 2001, respectively. Cash flow used
in financing activities was higher in 2003 and 2002 due mainly to increased
activity in the Companys share buy-back program during those periods. During
2003, 2002, and 2001, the Company purchased 625,600, 404,400, and 240,000
shares of its common stock for approximately $26.6 million, $15.3 million, and
$9.6 million, respectively.

On February 3, 2004, the Board of Directors of the Company extended to
February 28, 2005, the Companys authorization to purchase from time to time up
to 4 million shares of stock in the open market or through directly negotiated
transactions. Also on February 3, 2004, the Companys Board of Directors
declared a special dividend of $4.00 per share, or approximately $75.7 million.
The Company may use a portion of its $100 million credit facility to fund a
portion of the special dividend.

During 2001, the Company completed negotiations with NBC regarding its
network affiliation agreements, and entered into a ten year agreement that
calls for compensation payments from NBC for the first five years and is
compensation neutral thereafter. During 2003, the Company completed
negotiations with CBS regarding its network affiliation agreements and entered
into a compensation neutral ten year agreement.

The Company has committed to make certain investments in its venture
capital funds when called by the funds manager. The Company anticipates
additional funding related to its venture capital portfolio of $1.0 million
over the next one to three years. The Company also anticipates the funding of
its private debt and equity holdings of approximately $0.5 million during 2004.

At December 31, 2003, and 2002, the Company had no outstanding debt. On
March 21, 2001, the Company entered into a $100 million unsecured 364-day
revolving credit facility with a bank. On May 20, 2002, and May 19, 2003, the
Company renewed the facility for an additional year on substantially similar
terms. No amounts have been drawn on this facility since inception. At the
end of the term of the facility, any outstanding principal and interest will
come due, unless the bank, in its sole discretion, otherwise extends the
facility. The facility provides that the funds drawn may be used for working
capital and other general corporate purposes, capital expenditures, repurchases
of common stock, acquisitions, and investments. Subsequent to December 31,
2003, the Company renewed the facility on substantially similar terms,
extending its maturity date to May 18, 2005.

The Company believes that its current level of cash, expected future cash
flows from operations, and its credit facility are sufficient to meet the needs
of its businesses. If suitable opportunities arise for additional
acquisitions, the Company believes it can arrange for additional debt financing
or use Common Stock or Preferred Stock as payment for all or part of the
consideration for such acquisitions, or the Company may seek additional funds
in the equity or debt markets.

Other Company commitments are shown in Note 16 to the Consolidated
Financial Statements. Further discussion of investments and valuation is
contained in Notes 2 and 13 to the Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2003, the Company had no off-balance sheet
arrangements.

16



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##### 



TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

|                                                                                  |       |       |                        |        |  |        |       |        |  |       |       |        |  |   |    |     |      |   |       |       | 
|--------------------------------------------------------------------------------- | ----- | ----- | ---------------------- | ------ |  | ------ | ----- | ------ |  | ----- | ----- | ------ |  | - | -- | --- | ---- | - | ----- | ----- | 
|                                                                                  |       |       | Payments Due By Period
|                                                                                  |       |       |                       
|                                                                                  |       |       |                        |        |  |        | Less  |        |  |       |       |        |  |   |    |     | More
|Contractual Obligations                                                           |       |       |                        |        |  | Than 1 |       | 1-3    |  | 3-5   |       | Than 5
|(In $000s)                                                                       |       | Total |                        | Year   |  | Years  |       | Years  |  | Years
|                                                                                  |       |       |                        |        |  |        |       |        |  |      
|Long-Term Debt                                                                    |       | $     |                       |        |  | $      |      |        |  | $     |      |        |  | $ |   |     |      | $ |      |      
|Capital Lease Obligations                                                         |       |       |                       |        |  |        |      |        |  |       |      |        |  |   |   |     |      |   |      |      
|Operating Lease Obligations                                                       |       |       | 1,524                  |        |  |        | 694   |        |  |       | 744   |        |  |   | 68 |     |      |   | 18    |      
|Purchase Obligations                                                              |       |       | 14,350                 |        |  |        | 9,628 |        |  |       | 4,720 |        |  |   | 2  |     |      |   |      |      
|Other Long-Term
Liabilities Reflected on
the Registrants Balance
Sheet Under GAAP |       |       | 6,621                  |        |  |        | 500   |        |  |       | 913   |        |  |   | 97 |     |      |   | 5,111 |      
|                                                                                  |       |       |                        |        |  |        |       |        |  |       |       |        |  |   |    |     |      |   |       |      
|                                                                                  | Total |       | $                      | 22,495 |  |        | $     | 10,822 |  |       | $     | 6,377  |  |   | $  | 167 |      |   | $     | 5,129 | 
|                                                                                  |       |       |                        |        |  |        |       |        |  |       |       |        |  |   |    |     |      |   |       |      

The above table does not take into account the payments that would be
required to service outstanding debt should the Company draw upon its currently
unused $100 million line of credit. In addition, the table does not reflect
amounts related to cash income taxes to be paid in future years. Please see
Note 10 to the Consolidated Financial Statements for additional information on
historical cash taxes paid.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Portions of the Companys investment portfolio may be exposed to equity
price and interest rate risk. While the Company held no marketable equity
securities at December 31, 2003 or 2002, it may from time to time have
investments in marketable equity securities acquired either through direct
purchases or as a result of distributions from its venture capital funds.

As of December 31, 2003, and 2002, real estate related investments totaled
$2.7 million and $6.3 million, respectively. These investments consist
primarily of residential land and lots in various stages of development and
completion, and receivables related to prior land sales. The Company does not
plan to make any future investments in real estate, but will continue to manage
the existing portfolio to maximize the value to the Company. Substantially all
of the remaining investment real estate is located in South Carolina.

Additional disclosures concerning the fair values in relation to the
carrying values of the Companys financial instruments are included in Notes 5
and 13 to the Consolidated Financial Statements.

17



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##### 



Item 8. Financial Statements and Supplementary Information

CONSOLIDATED BALANCE SHEETS
THE LIBERTY CORPORATION AND SUBSIDIARIES(In $000s)

|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |         |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | -------- | ------------------ | ------- | ------- | -------- | ------- | ------- | 
|                                                                                                                                                  |                                                                                                          |                            |                                            |          | As of December 31,
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                   
|                                                                                                                                                  |                                                                                                          |                            |                                            |          | 2003               |         | 2002   
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |        
|ASSETS                                                                                                                                            |                                                                                                          |                            |                                            |          |                    |         |         |         
|Current assets:                                                                                                                                   |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  | Cash and cash equivalents                                                                                |                            | $                                          | 62,177   |                    |         | $       | 67,917   |        
|                                                                                                                                                  | Receivables (net of allowance for doubtful
accounts of $1,738 and $1,963 in 2003 and
2002, respectively) |                            |                                            | 42,364   |                    |         |         | 42,069   |        
|                                                                                                                                                  | Program rights                                                                                           |                            |                                            | 4,564    |                    |         |         | 4,433    |        
|                                                                                                                                                  | Prepaid and other current assets                                                                         |                            |                                            | 3,013    |                    |         |         | 2,982    |        
|                                                                                                                                                  | Income taxes receivable                                                                                  |                            |                                            |         |                    |         |         | 2,370    |        
|                                                                                                                                                  | Deferred income taxes                                                                                    |                            |                                            | 2,183    |                    |         |         | 5,508    |        
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          | Total current assets       |                                            |          | 114,301            |         |         |          | 125,279 |        
|Property, plant, and equipment:                                                                                                                   |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  | Land                                                                                                     |                            |                                            | 5,657    |                    |         |         | 5,639    |        
|                                                                                                                                                  | Buildings and improvements                                                                               |                            |                                            | 48,969   |                    |         |         | 52,638   |        
|                                                                                                                                                  | Furniture and equipment                                                                                  |                            |                                            | 167,775  |                    |         |         | 157,401  |        
|                                                                                                                                                  | Less: Accumulated depreciation                                                                           |                            |                                            | (125,417 | )                  |         |         | (120,409 | )      
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          |                            | 96,984                                     |          |                    |         | 95,269  |         
|Intangible assets subject to amortization (net
of $841 and $751 accumulated amortization in
2003 and 2002, respectively)                          |                                                                                                          |                            | 270                                        |          |                    |         | 369     |         
|FCC licenses                                                                                                                                      |                                                                                                          |                            | 304,525                                    |          |                    |         | 304,285 |         
|Goodwill                                                                                                                                          |                                                                                                          |                            | 101,387                                    |          |                    |         | 101,387 |         
|Investments and other assets                                                                                                                      |                                                                                                          |                            | 44,798                                     |          |                    |         | 44,162  |         
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          |                            | Total assets                               |          | $                  | 662,265 |         |          | $       | 670,751 | 
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                              |                                                                                                          |                            |                                            |          |                    |         |         |         
|Current liabilities:                                                                                                                              |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  | Accounts payable and accrued expenses                                                                    |                            | $                                          | 23,817   |                    |         | $       | 24,433   |        
|                                                                                                                                                  | Program contract obligations                                                                             |                            |                                            | 4,734    |                    |         |         | 4,486    |        
|                                                                                                                                                  | Accrued income taxes payable                                                                             |                            |                                            | 3,874    |                    |         |         |         |        
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          | Total current liabilities  |                                            |          | 32,425             |         |         |          | 28,919  |        
|Unearned revenue                                                                                                                                  |                                                                                                          |                            | 11,802                                     |          |                    |         | 5,637   |         
|Deferred income taxes                                                                                                                             |                                                                                                          |                            | 89,417                                     |          |                    |         | 91,647  |         
|Other liabilities                                                                                                                                 |                                                                                                          |                            | 6,621                                      |          |                    |         | 6,312   |         
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          |                            | Total liabilities                          |          |                    | 140,265 |         |          |         | 132,515 | 
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|Shareholders equity:                                                                                                                             |                                                                                                          |                            |                                            |          |                    |         |         |         
|Common stock (authorized  50,000,000 shares,
no par value, shares issued and outstanding 
18,930,500 shares in 2003, 19,423,317 shares in
2002) |                                                                                                          |                            | 71,788                                     |          |                    |         | 92,978  |         
|Unearned stock compensation                                                                                                                       |                                                                                                          |                            | (4,405                                     | )        |                    |         | (3,802  | )       
|Retained earnings                                                                                                                                 |                                                                                                          |                            | 454,379                                    |          |                    |         | 448,887 |         
|Unrealized investment gains                                                                                                                       |                                                                                                          |                            | 238                                        |          |                    |         | 173     |         
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          | Total shareholders equity |                                            |          | 522,000            |         |         |          | 538,236 |        
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          |                            | Total liabilities and shareholders equity |          | $                  | 662,265 |         |          | $       | 670,751 | 
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        

See notes to consolidated financial statements.

18



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##### 



CONSOLIDATED STATEMENTS OF INCOME
THE LIBERTY CORPORATION AND SUBSIDIARIES(In $000s, except per share data)

|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |         |   |        | 
|----------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | - | -------------------------------------------------------------------------------------- | ------- | -------------------------------- | ------ | ------- | ------- | ---- | ------- | ------- | ------- | - | ------ | 
|                                                                        |                                                                                          |   |                                                                                        |         | For the Years Ended December 31,
|                                                                        |                                                                                          |   |                                                                                        |         |                                 
|                                                                        |                                                                                          |   |                                                                                        |         | 2003                             |        | 2002    |         | 2001
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |     
|REVENUES                                                                |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|Station revenues (net of commissions)                                   |                                                                                          | $ | 184,636                                                                                |         |                                  | $      | 190,452 |         |      | $       | 165,211 |        
|Cable advertising (net of commissions) and other revenues               |                                                                                          |   | 15,648                                                                                 |         |                                  |        | 16,226  |         |      |         | 13,220  |        
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|                                                                        | Net revenues                                                                             |   |                                                                                        | 200,284 |                                  |        |         | 206,678 |      |         |         | 178,431 |  
|EXPENSES                                                                |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|Operating expenses                                                      |                                                                                          |   | 121,642                                                                                |         |                                  |        | 115,979 |         |      |         | 104,054 |        
|Amortization of program rights                                          |                                                                                          |   | 7,214                                                                                  |         |                                  |        | 7,281   |         |      |         | 7,937   |        
|Depreciation and amortization of intangibles                            |                                                                                          |   | 18,462                                                                                 |         |                                  |        | 17,762  |         |      |         | 31,970  |        
|Corporate, general, and administrative expenses                         |                                                                                          |   | 14,382                                                                                 |         |                                  |        | 13,481  |         |      |         | 11,820  |        
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|                                                                        | Total operating expenses                                                                 |   |                                                                                        | 161,700 |                                  |        |         | 154,503 |      |         |         | 155,781 |  
|                                                                        |                                                                                          |   | Operating income                                                                       |         |                                  | 38,584 |         |         |      | 52,175  |         |         |   | 22,650 | 
|Net investment income (loss)                                            |                                                                                          |   | (348                                                                                   | )       |                                  |        | 616     |         |      |         | 4,086   |        
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|                                                                        | Income before income taxes and the cumulative effect of a change
in accounting principle |   |                                                                                        | 38,236  |                                  |        |         | 52,791  |      |         |         | 26,736  |  
|Provision for income taxes                                              |                                                                                          |   | 14,339                                                                                 |         |                                  |        | 19,796  |         |      |         | 10,160  |        
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|INCOME BEFORE THE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE |                                                                                          |   | 23,897                                                                                 |         |                                  |        | 32,995  |         |      |         | 16,576  |        
|                                                                        |                                                                                          |   | Cumulative effect of a change in accounting principle (net
of $29,045 of income taxes) |         |                                  |       |         |         |      | (47,388 | )       |         |   |       | 
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|NET INCOME (LOSS)                                                       |                                                                                          | $ | 23,897                                                                                 |         |                                  | $      | (14,393 | )       |      | $       | 16,576  |        
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|BASIC EARNINGS (LOSS) PER COMMON SHARE:                                 |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|                                                                        |                                                                                          |   | From continuing operations                                                             |         | $                                | 1.25   |         |         | $    | 1.68    |         |         | $ | 0.85   | 
|                                                                        |                                                                                          |   | From the cumulative effect of a change in accounting principle                         |         |                                  |       |         |         |      | (2.41   | )       |         |   |       | 
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|                                                                        | Basic earnings (loss) per common share                                                   |   | $                                                                                      | 1.25    |                                  |        | $       | (0.73   | )    |         | $       | 0.85    |  
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|DILUTED EARNINGS (LOSS) PER COMMON SHARE                                |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|                                                                        |                                                                                          |   | From continuing operations                                                             |         | $                                | 1.24   |         |         | $    | 1.68    |         |         | $ | 0.84   | 
|                                                                        |                                                                                          |   | From the cumulative effect of a change in accounting principle                         |         |                                  |       |         |         |      | (2.41   | )       |         |   |       | 
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        
|                                                                        | Diluted earnings (loss) per common share                                                 |   | $                                                                                      | 1.24    |                                  |        | $       | (0.73   | )    |         | $       | 0.84    |  
|                                                                        |                                                                                          |   |                                                                                        |         |                                  |        |         |         |      |         |         |        

See notes to consolidated financial statements.

19



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##### 



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
THE LIBERTY CORPORATION AND SUBSIDIARIES(In 000s, except per share data)

|                                                                                  |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------- |  | ----------- | ------ | ------ |  | ------------ | ------- | -------- |  | ---------- | ------ | -------- |  | ---------- | ---- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                  |  |             |        |        |  |              |         |          |  |            |        |          |  | Unrealized |      |   |  |   |         |   |  |  
|                                                                                  |  | Common      |        |        |  |              |         | Unearned |  | Investment |        |          |  |            |      |   |  |  
|                                                                                  |  | Shares      |        | Common |  | Stock        |         | Gains    |  | Retained   |        |          |  |           
|                                                                                  |  | Outstanding |        | Stock  |  | Compensation |         | (Losses) |  | Earnings   |        | Total(1)
|                                                                                  |  |             |        |        |  |              |         |          |  |            |        |         
|Balance at January 1, 2001                                                        |  |             | 19,538 |        |  | $            | 99,033  |          |  | $          |       |          |  | $          | 690  |   |  | $ | 481,270 |   |  | $ | 580,993 |  
|Net income                                                                        |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   | 16,576  |   |  |   | 16,576  |  
|Net unrealized investment gains (losses), net of taxes                            |  |             |        |        |  |              |         |          |  |            |        |          |  |            | (753 | ) |  |   |         |   |  |   | (753    | )
|Dividends - Common Stock - $0.88 per share                                        |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   | (17,290 | ) |  |   | (17,290 | )
|Stock issued for employee benefit and performance incentive
compensation programs |  |             | 452    |        |  |              | 14,200  |          |  |            | (3,687 | )        |  |            |      |   |  |   |         |   |  |   | 10,513  |  
|Income tax benefit resulting from employee exercise of options                    |  |             |        |        |  |              | 1,274   |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   | 1,274   |  
|Stock repurchased                                                                 |  |             | (240   | )      |  |              | (9,642  | )        |  |            |        |          |  |            |      |   |  |   |         |   |  |   | (9,642  | )
|                                                                                  |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   |         |  
|Balance at December 31, 2001                                                      |  |             | 19,750 |        |  |              | 104,865 |          |  |            | (3,687 | )        |  |            | (63  | ) |  |   | 480,556 |   |  |   | 581,671 |  
|                                                                                  |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   |         |  
|Net loss                                                                          |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   | (14,393 | ) |  |   | (14,393 | )
|Net unrealized investment gains (losses), net of taxes                            |  |             |        |        |  |              |         |          |  |            |        |          |  |            | 236  |   |  |   |         |   |  |   | 236     |  
|Dividends - Common Stock - $0.88 per share                                        |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   | (17,276 | ) |  |   | (17,276 | )
|Stock issued for employee benefit and performance incentive
compensation programs |  |             | 77     |        |  |              | 3,321   |          |  |            | (115   | )        |  |            |      |   |  |   |         |   |  |   | 3,206   |  
|Income tax benefit resulting from employee exercise of options                    |  |             |        |        |  |              | 73      |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   | 73      |  
|Stock repurchased                                                                 |  |             | (404   | )      |  |              | (15,281 | )        |  |            |        |          |  |            |      |   |  |   |         |   |  |   | (15,281 | )
|                                                                                  |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   |         |  
|Balance at December 31, 2002                                                      |  |             | 19,423 |        |  |              | 92,978  |          |  |            | (3,802 | )        |  |            | 173  |   |  |   | 448,887 |   |  |   | 538,236 |  
|                                                                                  |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   |         |  
|Net income                                                                        |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   | 23,897  |   |  |   | 23,897  |  
|Net unrealized investment gains (losses), net of taxes                            |  |             |        |        |  |              |         |          |  |            |        |          |  |            | 65   |   |  |   |         |   |  |   | 65      |  
|Dividends - Common Stock - $0.96 per share                                        |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   | (18,405 | ) |  |   | (18,405 | )
|Stock issued for employee benefit and performance incentive
compensation programs |  |             | 133    |        |  |              | 5,167   |          |  |            | (603   | )        |  |            |      |   |  |   |         |   |  |   | 4,564   |  
|Income tax benefit resulting from employee exercise of options                    |  |             |        |        |  |              | 226     |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   | 226     |  
|Stock repurchased                                                                 |  |             | (625   | )      |  |              | (26,583 | )        |  |            |        |          |  |            |      |   |  |   |         |   |  |   | (26,583 | )
|                                                                                  |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   |         |  
|Balance at December 31, 2003                                                      |  |             | 18,931 |        |  | $            | 71,788  |          |  | $          | (4,405 | )        |  | $          | 238  |   |  | $ | 454,379 |   |  | $ | 522,000 |  
|                                                                                  |  |             |        |        |  |              |         |          |  |            |        |          |  |            |      |   |  |   |         |   |  |   |         |  



|(1) |  | Comprehensive income (loss), which includes the aggregate of net income (loss) and net unrealized investment gains (losses), was $23,962, $(14,157), and $15,823, for 2003, 2002, and 2001, respectively.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.

20



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##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS
THE LIBERTY CORPORATION AND SUBSIDIARIES(In $000s)

|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |          |  
|------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------- | - | -------------------------------- | ------ | ---- | - | ------- | ------ | - | - | -------- | -------- | -
|                                                                                                                   |                                                       |   | For the Years Ended December 31,
|                                                                                                                   |                                                       |   |                                 
|                                                                                                                   |                                                       |   | 2003                             |        | 2002 |   | 2001   
|                                                                                                                   |                                                       |   |                                  |        |      |   |        
|OPERATING ACTIVITIES                                                                                               |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|Net income (loss)                                                                                                  |                                                       | $ | 23,897                           |        |      | $ | (14,393 | )      |   | $ | 16,576   |         
|                                                                                                                   | Cumulative effect of a change in accounting principle |   |                                  |       |      |   |         | 47,388 |   |   |          |         |  
|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|Income before the cumulative effect of a change in accounting principle                                            |                                                       |   | 23,897                           |        |      |   | 32,995  |        |   |   | 16,576   |         
|Adjustments to reconcile income from continuing operations to net cash
provided by (used in) operating activities: |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|                                                                                                                   | Loss on disposal of operating assets                  |   |                                  | 2,160  |      |   |         | 296    |   |   |          | 147      |  
|                                                                                                                   | Realized investment losses                            |   |                                  | 1,729  |      |   |         | 3,544  |   |   |          | 2,211    |  
|                                                                                                                   | Depreciation                                          |   |                                  | 18,223 |      |   |         | 17,063 |   |   |          | 16,049   |  
|                                                                                                                   | Amortization of intangibles                           |   |                                  | 239    |      |   |         | 699    |   |   |          | 15,921   |  
|                                                                                                                   | Amortization of program rights                        |   |                                  | 7,214  |      |   |         | 7,281  |   |   |          | 7,937    |  
|                                                                                                                   | Cash paid for program rights                          |   |                                  | (7,097 | )    |   |         | (7,499 | ) |   |          | (7,873   | )
|                                                                                                                   | Provision for deferred income taxes                   |   |                                  | 2,153  |      |   |         | 11,900 |   |   |          | 9,497    |  
|Changes in operating assets and liabilities, net of effects of acquisitions:                                       |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|                                                                                                                   | Receivables                                           |   |                                  | (295   | )    |   |         | (2,034 | ) |   |          | 526      |  
|                                                                                                                   | Other assets                                          |   |                                  | 4,049  |      |   |         | 17,638 |   |   |          | 42,865   |  
|                                                                                                                   | Accounts payable and accrued expenses                 |   |                                  | 888    |      |   |         | 4,757  |   |   |          | (52,479  | )
|                                                                                                                   | Accrued income taxes                                  |   |                                  | 3,874  |      |   |         |       |   |   |          | (128,254 | )
|                                                                                                                   | Unearned revenue                                      |   |                                  | 6,165  |      |   |         | 4,756  |   |   |          | 881      |  
|                                                                                                                   | Other liabilities                                     |   |                                  | (73    | )    |   |         | (293   | ) |   |          | (245     | )
|                                                                                                                   | All other operating activities, net                   |   |                                  | (1,426 | )    |   |         | 695    |   |   |          | 743      |  
|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                                                |                                                       |   | 61,700                           |        |      |   | 91,798  |        |   |   | (75,498  | )       
|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|INVESTING ACTIVITIES                                                                                               |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|Purchase of property, plant, and equipment                                                                         |                                                       |   | (21,971                          | )      |      |   | (24,704 | )      |   |   | (13,853  | )       
|Proceeds from sale of property, plant, and equipment                                                               |                                                       |   | 262                              |        |      |   | 385     |        |   |   | 750      |         
|Investment securities sold                                                                                         |                                                       |   |                                 |        |      |   | 8,083   |        |   |   | 2,755    |         
|Investment securities acquired                                                                                     |                                                       |   | (5,900                           | )      |      |   | (13,110 | )      |   |   | (12,502  | )       
|Proceeds from sale of investment properties                                                                        |                                                       |   | 3,578                            |        |      |   | 1,619   |        |   |   | 2,010    |         
|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                                                |                                                       |   | (24,031                          | )      |      |   | (27,727 | )      |   |   | (20,840  | )       
|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|FINANCING ACTIVITIES                                                                                               |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|Dividends paid                                                                                                     |                                                       |   | (18,405                          | )      |      |   | (17,276 | )      |   |   | (17,290  | )       
|Stock issued for employee benefit and compensation programs                                                        |                                                       |   | 1,579                            |        |      |   | 914     |        |   |   | 9,756    |         
|Repurchase of common stock                                                                                         |                                                       |   | (26,583                          | )      |      |   | (15,281 | )      |   |   | (9,642   | )       
|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|NET CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES                                                                 |                                                       |   | (43,409                          | )      |      |   | (31,643 | )      |   |   | (17,176  | )       
|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|INCREASE (DECREASE) IN CASH                                                                                        |                                                       |   | (5,740                           | )      |      |   | 32,428  |        |   |   | (113,514 | )       
|Cash at beginning of year                                                                                          |                                                       |   | 67,917                           |        |      |   | 35,489  |        |   |   | 149,003  |         
|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |         
|CASH AT END OF YEAR                                                                                                |                                                       | $ | 62,177                           |        |      | $ | 67,917  |        |   | $ | 35,489   |         
|                                                                                                                   |                                                       |   |                                  |        |      |   |         |        |   |   |          |         

See notes to consolidated financial statements.

21



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES

1. Nature of Operations

The Liberty Corporation and Subsidiaries, (Liberty or the Company),
through its operating subsidiary, Cosmos Broadcasting (Cosmos), owns fifteen
network-affiliated television stations (the stations), principally located in
the South and Midwest. In addition, Cosmos owns Cable Vantage, a cable
advertising sales subsidiary, and Broadcast Merchandising Corporation, a
professional broadcast equipment dealership.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements of The Liberty
Corporation and Subsidiaries include the accounts of the Company after
elimination of all significant intercompany balances and transactions.

Variable interest entities are accounted for in accordance with
Interpretation of Financial Standards (FIN) No. 46 Consolidation of Variable
Interest Entities(FIN 46). The Interpretation requires the consolidation
of entities by the party that is determined to be the primary beneficiary (as
defined in FIN 46), as a result of its ownership, contractual or other
financial interests in another entity. The Company has evaluated each of its
investments to determine if consolidation of the investee company would be
required. This analysis required the Company to use a number of estimates.
These estimates include, among other things, the future cash flows to be
generated by the investee company, terminal multiples for assumed liquidation
values, and discount rates to be used in present value calculations. Based on
these analyses, it was determined that one investment meets the definition of a
variable interest entity, but that the Company is not the primary
beneficiary of this entity, and as such none of the Companys investments
should be consolidated at December 31, 2003, or any time prior to that date.

Variable Interest Entities

As noted above, the Company performed an evaluation of its investments to
determine if any investee companies were variable interest entities as
defined by FIN 46. One investment was determined to be a variable interest
entity. Liberty is a third party investor of the variable interest entity and
has no other relationship with it or its management. The investee company is
engaged in the development of digital entertainment to be viewed at existing
movie theaters. Liberty acquired its interests from time to time since 2002
through the purchase of convertible notes. As of December 31, 2003, the
carrying value of those notes, and the associated accrued interest, was
approximately $4.9 million. Libertys maximum exposure to loss as a result of
its involvement with this entity is limited to the value of its investment.

Use of Estimates and Assumptions

Financial statements prepared in accordance with accounting principles
generally accepted in the United States require management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes to the consolidated financial statements.
Actual results could differ from those estimates and assumptions.

Cash and Cash Equivalents

The Company includes with cash and cash equivalents all highly liquid
investments which mature within three months of the date of acquisition. The
Company routinely enters into repurchase agreements with banks whereby the
Company makes overnight purchases of government securities using its available
cash balances. The following day, the bank is required to repurchase the
investments from the Company. The Company generally does not require
collateral for these investments. Overnight investments of $15,772,000 and
$9,309,000 were included in cash and cash equivalents at December 31, 2003 and
2002, respectively.

Receivables

Receivables, net of allowance for doubtful accounts, are carried at cost,
which approximates fair value. The Company calculates its allowance for
doubtful accounts based on an estimation process. The Company uses a
mathematical calculation coupled with the specific identification of certain
accounts to estimate its allowance for doubtful accounts. Estimates of the
likelihood of collection are made based on a multi-year historical average of
the actual collections experience at each station. The Company charges
accounts receivable off against its allowance for doubtful accounts when it
deems them to be uncollectible on a specific identification basis.

Program Rights

Program rights result from license agreements under which the Company has
acquired rights to broadcast certain television program material, and are
stated at cost less amortization. The cost of rights acquired is recorded as
an asset and a liability when the program material has been accepted and made
available for broadcast. Amortization is determined using both straight-line
and accelerated methods over the terms of the license agreements. Carrying
amounts are regularly reviewed by management for indications of impairment and
are adjusted when appropriate to estimated amounts recoverable from future
broadcasts of the applicable program material.

FCC Licenses and Goodwill

FCC licenses and goodwill are accounted for in accordance with Statement
of Financial Accounting Standards (SFAS) No. 142 Goodwill and Other
Intangible Assets (SFAS No. 142). SFAS No. 142, which the Company adopted
during the first quarter of 2002, requires that intangible assets with
indefinite lives and goodwill no longer be amortized to earnings, but instead
be reviewed for impairment. This review for impairment, performed at least
annually, requires management to make certain estimates to determine the
estimated fair value of its individual stations and its station group as a
whole. These estimates include, among other things, the future cash flows to
be generated by its stations, terminal multiples for assumed station sales,
discount rates to be used in present value calculations, assumed values for
fixed assets and network affiliation contracts, and assumed future capital
expenditure levels. Actual results and future market conditions could differ
from the estimates and assumptions used.

22



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES

Program Contract Obligations

Program contract obligations represent the gross amounts to be paid to
program suppliers over the life of the contracts. Program rights acquired
through the assumption of program contract obligations were approximately
$7,345,000 and $7,036,000 for 2003 and 2002, respectively. Commitments for
license agreements that were executed but were not reported in the accompanying
balance sheets because they were not available for broadcast were $12,815,000
and $9,266,000 for 2003 and 2002, respectively.

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Depreciation over
the estimated useful lives of the properties is determined principally using
the straight-line method with lives ranging from 3 to 30 years. During the
fourth quarter of 2003, the Company changed the estimates of the useful lives
used to account for back-up and redundant equipment. The new estimate results
in the retirement of all assets that have not been utilized in the last twelve
to twenty-four months. The changes in estimates resulted in a charge of
$671,000 in the fourth quarter of 2003.

Station Revenues

Station revenues are generated primarily from the sale of television
advertising time, and are recognized in the period during which the advertising
spots are aired. Station revenues are presented net of agency commissions of
$31,625,000, $34,147,000, and $27,322,000 in 2003, 2002, and 2001,
respectively. Station revenues also include revenues from the sale of
advertising space on the stations internet web sites and from network
affiliation contracts. Revenues from internet advertising and network
affiliation contracts are recognized as earned over the lives of the contracts.
Cash payments received in excess of revenue earned to-date on network
affiliation contracts are recorded as unearned revenue.

Cable Advertising Revenues

Cable advertising revenues are generated primarily from assisting local
cable operators with the sale of commercial time available in cable network
programs. Revenues are recognized in the period during which the advertising
spots sold by the Company are aired by the local cable operator. Cable
advertising and other revenues are presented net of commissions of $2,651,000,
$2,712,000, and, $1,636,000 in 2003, 2002, and 2001, respectively.

Concentration of Credit Risk

Significant portions of the Companys accounts receivable are due from
local and national advertising agencies. Such amounts are generally unsecured.

Barter Transactions

Revenue from barter transactions is recognized when advertisements are
broadcast. Barter revenue is recognized based on the fair value of merchandise
or services received by the Company. Revenue from barter transactions was
$3,576,000, $2,976,000, and $3,198,000 for the years 2003, 2002, and 2001,
respectively.

Merchandise or services received are charged to cost and expense when
received or used. Expense related to barter transactions was $3,320,000,
$3,079,000, and $3,113,000 for the years 2003, 2002, and 2001, respectively.

Realized and Unrealized Investment Gains and Losses

Available-for-sale securities are stated at fair value, with the
unrealized gains and losses, net of tax, reported in other comprehensive
income. Realized gains and losses and declines in value judged to be
other-than-temporary on available-for-sale securities are included in net
investment income. The cost of securities sold is based on the specific
identification method. Interest and dividends on securities classified as
available-for-sale are included in net investment income.

Realized gains and losses on the sale of real estate acquired for
development and resale are included in net investment income. Realized gains
and losses include write-downs for impaired values of investment assets. The
Company establishes impairments on specific assets at the time the Company
determines that the assets to have been impaired and the impairment can be
estimated. In performing this determination, management utilizes mathematical
models, market information, and valuation information supplied by investee
companies to determine if an impairment exists.

Income Taxes

Income taxes are computed using the liability method as required by SFAS
No. 109, Accounting for Income Taxes(SFAS No 109). Under SFAS No. 109,
deferred tax assets and liabilities are determined based on the differences
between the financial reporting and tax basis of assets and liabilities and are
measured using the enacted tax rates and law that will be in effect when the
differences are expected to reverse.

Equity Compensation

In accordance with the provisions of SFAS No. 123, Accounting for
Stock-Based Compensation (SFAS No. 123), the Company has elected to follow
the intrinsic value method to account for stock-based compensation. Under the
intrinsic value method, because the exercise price of the Companys employee
stock options at least equals the market price of the underlying stock on the
date of the grant, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
statement. Please see Note 9 Stock Ownership and Stock Option Plansfor a
tabular presentation of this information and additional important disclosures
regarding the Companys equity compensation programs.

The Company accounts for awards of restricted stock in accordance with
SFAS No. 123. The Company recognizes compensation expense equal to the grant
date fair value of the restricted stock awards as compensation expense over the
vesting period of the restricted shares.

Reclassifications

Reclassifications have been made in the 2002 and 2001 Consolidated
Financial Statements to conform to the 2003 presentation.

23



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES

3. Intangible Assets Subject to Amortization

At December 31, 2003, the Companys intangible assets subject to
amortization were comprised of leases acquired through station purchases for
space on certain of its towers and loan costs associated with the Companys
unused line of credit. At December 31, 2002, the Companys intangible assets
subject to amortization were comprised of leases acquired through station
purchases for space on certain of its towers, non-compete agreements, and loan
costs associated with the Companys unused line of credit.

Estimated amortization expense resulting from intangible assets subject to
amortization for the five year period ending 2008 is expected to be as follows:

|            |  |                        |     | 
|----------- |  | ---------------------- | --- | 
|(In $000s) |  | Estimated Amortization
|            |  |                       
|2004        |  | $                      | 171 | 
|2005        |  |                        | 171 | 
|2006        |  |                        | 170 | 
|2007        |  |                        | 168 | 
|2008        |  |                        | 167 | 

4. FCC Licenses and Goodwill

FCC licenses, network affiliations, and goodwill are accounted for in
accordance with SFAS No. 142 Goodwill and Other Intangible Assets (SFAS No.
142). SFAS No. 142, which the Company adopted during the first quarter of
2002, requires that intangible assets with indefinite lives and goodwill no
longer be amortized to earnings, but instead be reviewed for impairment. The
Company recorded $15.1 million ($9.4 million net of income taxes) of
amortization expense related to intangibles that are no longer required to be
amortized for the year ended December 31, 2001. In connection with the
adoption of SFAS No. 142, the Company reduced the carrying value of its FCC
licenses by $76.4 million ($47.4 million net of income taxes) as a cumulative
effect of a change in accounting principle.

The following table reconciles net income for the period ended December
31, 2001 as reported to the adjusted December 31, 2001 net income, had SFAS No.
142 been in effect as of January 1, 2001:

|                                                                                       |  |      |        |      |  |      |        |  |  |   |        | 
|-------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|(In $000s)                                                                            |  | 2003 |        | 2002 |  | 2001
|                                                                                       |  |      |        |      |  |     
|Reported income from continuing
operations                                             |  | $    | 23,897 |      |  | $    | 32,995 |  |  | $ | 16,576 | 
|Add back : Goodwill and indefinite
lived intangible amortization (net of
income taxes) |  |      |       |      |  |      |       |  |  |   | 9,371  | 
|                                                                                       |  |      |        |      |  |      |        |  |  |   |        | 
|Adjusted income from continuing
operations                                             |  | $    | 23,897 |      |  | $    | 32,995 |  |  | $ | 25,947 | 
|                                                                                       |  |      |        |      |  |      |        |  |  |   |        | 

The following tables reconcile basic and diluted earnings per share as
reported at December 31, 2001, to the adjusted December 31, 2001 basic and
diluted earnings per share, had SFAS No. 142 been in effect as of January 1,
2001:

|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 
|-------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                                                                       |  | 2003 |      | 2002 |  | 2001
|                                                                                       |  |      |      |      |  |     
|Basic earnings per share:                                                              |  |      |      |      |  |      |      |  |  |   |      | 
|Reported basic earnings per share from
continuing operations                           |  | $    | 1.25 |      |  | $    | 1.68 |  |  | $ | 0.85 | 
|Add back : Goodwill and indefinite lived
intangible amortization (net of income taxes) |  |      |     |      |  |      |     |  |  |   | 0.48 | 
|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 
|Adjusted basic earnings per share from
continuing operations                           |  | $    | 1.25 |      |  | $    | 1.68 |  |  | $ | 1.33 | 
|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 

|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 
|-------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                                                                       |  | 2003 |      | 2002 |  | 2001
|                                                                                       |  |      |      |      |  |     
|Diluted earnings per share:                                                            |  |      |      |      |  |      |      |  |  |   |      | 
|Reported diluted earnings per share form
continuing operations                         |  | $    | 1.24 |      |  | $    | 1.68 |  |  | $ | 0.84 | 
|Add back : Goodwill and indefinite lived
intangible amortization (net of income taxes) |  |      |     |      |  |      |     |  |  |   | 0.48 | 
|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 
|Adjusted diluted earnings per share from
continuing operations                         |  | $    | 1.24 |      |  | $    | 1.68 |  |  | $ | 1.32 | 
|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 

At December 31, 2003 and December 31, 2002, the Companys intangible
assets not subject to amortization were comprised of FCC licenses and Goodwill.
The Company includes these assets in the broadcasting segment in Note 15.

5. Investments and Other Assets

The Company had no sales of available-for-sale securities during 2003.
The Company realized $401,000 and $1,053,000 in gains on the sale of
available-for-sale securities in 2002, and 2001, respectively. The Company
realized $147,000 and $15,000 in losses on the sale of available-for-sale
securities in 2002, and 2001, respectively. Gains and losses on the sale of
available-for-sale securities are reported in net investment income on the face
of the income statement.

The major classifications of investments and other assets are as follows:

|                                              |  |              |        |  |  |   |        | 
|--------------------------------------------- |  | ------------ | ------ |  |  | - | ------ | 
|                                              |  | December 31,
|(In $000s)                                   |  | 2003         | 2002  
|                                              |  |              |       
|Private equity investments                    |  | $            | 11,629 |  |  | $ | 10,556 | 
|Private debt securities                       |  |              | 16,774 |  |  |   | 11,528 | 
|Real estate related investments               |  |              | 2,687  |  |  |   | 6,306  | 
|Investments in venture capital funds          |  |              | 5,733  |  |  |   | 7,258  | 
|Investments in low income housing tax credits |  |              | 5,310  |  |  |   | 6,343  | 
|Other                                         |  |              | 2,665  |  |  |   | 2,171  | 
|                                              |  |              |        |  |  |   |        | 
|Total investments and other assets            |  | $            | 44,798 |  |  | $ | 44,162 | 
|                                              |  |              |        |  |  |   |        | 

24



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES

Investments in debt securities and marketable equity securities are
accounted for in accordance with SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities (SFAS No. 115). SFAS No. 115
requires that all debt and marketable equity securities be classified into one
of three categories  held to maturity, available-for-sale, or trading. The
Company currently has no securities classified as held to maturity or
trading.
     Investments are generally held in the Corporate segment and are reported
on the following basis:



| |  | Private equity investments, all of which represent a voting interest
of less than 20%, are carried at cost, which includes provisions for
impaired value when appropriate.                                                                                                                                                                                                                                                                                           
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Private debt securities classified as available-for-sale are stated at
fair value with unrealized gains and losses, after adjustment for
deferred income taxes, reported directly in shareholders equity in
accumulated other comprehensive income (loss). Fair values for
private debt securities are estimated by discounting the expected
future cash flows using a current market rate applicable to the yield,
credit quality, and maturity of the investments.
| 
| |  | Real estate related investments consist primarily of residential land
and lots in various stages of development and completion, and
receivables related to prior land sales. The Companys real estate
properties were held for sale at December 31, 2003 and 2002, and
accordingly are carried at the lower of cost or fair market value less
costs to sell.                                                                                                        
| 
| |  | Investments in venture capital funds are generally carried at cost,
which includes provisions for impaired value where appropriate.                                                                                                                                                                                                                                                                                                                                  
| 
| |  | Investments in low income housing tax credits are accounted for using
the cost method, in accordance with Emerging Issues Task Force 94-1
Accounting for Tax Benefits Resulting from Investments in Affordable
Housing Projects. Under the cost method, any excess of the carrying
amount of the investment over its estimated residual value is
amortized over the remaining period during which the Company is to
receive tax credits.                           

Certain of the Companys private equity and debt securities have
conversion, anti-dilution, demand registration, and other features typical for
instruments of these types. In addition, certain of these instruments have
warrants attached that, if exercised, would allow the Company to purchase
additional shares in certain of its investee companies at predetermined prices.
These securities have maturities of two years or less.

See Note 13 Fair Values of Financial Instrumentsfor further discussion of
the methods used to estimate the fair values of the Companys financial
instruments.

6. Revolving Credit Facility

In March 2001, the Company entered into a $100 million unsecured 364-day
revolving credit facility with a bank. The Company renewed the facility for an
additional year on substantially similar terms on May 20, 2002 and May 19,
2003. No amounts have been drawn on this facility since inception. At the end
of the term of the facility, any outstanding principal and interest will come
due, unless the bank, in its sole discretion, otherwise extends the facility.
The facility provides that the funds drawn may be used for working capital and
other general corporate purposes, capital expenditures, repurchases of common
stock, acquisitions, and investments. Subsequent to December 31, 2003, the
Company renewed the $100 million credit facility on substantially similar
terms, extending its maturity date to May 18, 2005.

The Company had no outstanding debt, nor interest expense, during 2003,
2002, or 2001.

7. Shareholders Equity

The Company has adopted a Shareholder Rights Plan and declared a dividend
of one preferred stock purchase right for each outstanding share of common
stock. Upon becoming exercisable, each right entitles the holder to purchase
for a price of $150.00 one one-hundredth of a share of Series A Participating
Cumulative Preferred Stock. All of the rights may be redeemed by the Company at
a price of $0.01 per right until ten business days (or such later date as the
Board of Directors determines) after the public announcement that a person or
group has acquired beneficial ownership of 20 percent or more of the
outstanding common shares (Acquiring Person). Upon existence of an
Acquiring Person, the Company may redeem the rights only with the concurrence
of a majority of the directors not affiliated with the Acquiring Person. The
rights, which do not have voting power and are not entitled to dividends,
expire on August 7, 2010. The rights are not exercisable until ten business
days after the public announcement that a person has become an Acquiring Person
or after the commencement of a tender offer or exchange offer if, upon
consummation, such person or group would become an Acquiring Person. If, after
the rights become exercisable, the Company becomes involved in a merger or
certain other major corporate transactions, each right will entitle its holder,
other than the Acquiring Person, to receive common shares with a deemed market
value of twice such exercise price. There are 10,000,000 shares of preferred
stock, no par value per share authorized for issuance. At December 31, 2003
and December 31, 2002, there were 140,000 shares of preferred stock that were
reserved for issuance in connection with the Shareholder Rights Plan.

The Company repurchased through negotiated transactions and in the open
market 625,600, 404,400, and 240,000 common shares during 2003, 2002, and 2001,
respectively.

The components of unrealized appreciation on fixed maturity securities
available for sale and equity securities in the balance sheet caption
Unrealized Investment Gains and Losses (see Note 14) as of December 31 are as
follows:

|                                           |       |      |         |      |  |   |        |     | 
|------------------------------------------ | ----- | ---- | ------- | ---- |  | - | ------ | --- | 
|(In $000s)                                 |       | 2003 |         | 2002
|                                           |       |      |         |     
|Carrying value of securities               |       | $    | 16,774  |      |  | $ | 7,279  |    
|Amortized cost of securities               |       |      | (16,390 | )    |  |   | (7,000 | )  
|                                           |       |      |         |      |  |   |        |    
|Net unrealized appreciation (depreciation) |       |      | 384     |      |  |   | 279    |    
|Deferred income taxes                      |       |      | (146    | )    |  |   | (106   | )  
|                                           |       |      |         |      |  |   |        |    
|                                           | Total |      | $       | 238  |  |   | $      | 173 | 
|                                           |       |      |         |      |  |   |        |    

8. Employee Benefits

The Company has a postretirement plan that provides medical and life
insurance benefits for qualified retired employees. The postretirement medical
plan is generally contributory with retiree contributions adjusted annually to
limit employer contributions to predetermined amounts. The postretirement life
plan provides free insurance coverage for retirees and is insured with an
unaffiliated company.

The information presented in this footnote does not reflect the Medicare
Prescription Drug Improvement and Modernization Act of 2003 signed into law
December 8, 2003. Specifically, the measures of the Accumulated Postretirement
Benefit Obligation and the Net Periodic Postretirement Benefit cost shown do
not

25



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES

reflect this ACT. Specific authoritative guidance on the accounting
treatment of the Act is pending and upon issuance, may require a change in
previously reported information.

The information set forth in the tables below is based upon a measurement
date of December 31, of each respective year. Net periodic postretirement
benefit cost included the following components:

|                                         |  |      |     |      |  |      |     |   |  |   |     |  
|---------------------------------------- |  | ---- | --- | ---- |  | ---- | --- | - |  | - | --- | -
|(In $000s)                               |  | 2003 |     | 2002 |  | 2001
|                                         |  |      |     |      |  |     
|Service cost                             |  | $    | 27  |      |  | $    | 29  |   |  | $ | 26  |  
|Amortization of prior service cost       |  |      | 2   |      |  |      | 3   |   |  |   | 3   |  
|Amortization of actuarial net gain       |  |      |    |      |  |      | (3  | ) |  |   | (3  | )
|Interest cost                            |  |      | 111 |      |  |      | 137 |   |  |   | 163 |  
|                                         |  |      |     |      |  |      |     |   |  |   |     |  
|Net periodic postretirement benefit cost |  | $    | 140 |      |  | $    | 166 |   |  | $ | 189 |  
|                                         |  |      |     |      |  |      |     |   |  |   |     |  

The following schedule reconciles the accumulated postretirement benefit
obligation included in other liabilities on the balance sheets as of December
31:

|                                        |  |      |       |      |  |   |       |  
|--------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|(In $000s)                             |  | 2003 |       | 2002
|                                        |  |      |       |     
|Benefit obligation at beginning of year |  | $    | 1,723 |      |  | $ | 1,979 |  
|Service cost                            |  |      | 27    |      |  |   | 29    |  
|Interest cost                           |  |      | 111   |      |  |   | 137   |  
|Plan participants contributions        |  |      | 165   |      |  |   | 156   |  
|Benefits paid                           |  |      | (407  | )    |  |   | (305  | )
|Actuarial gain (loss )                  |  |      | 640   |      |  |   | (273  | )
|                                        |  |      |       |      |  |   |       |  
|Benefit obligation at end of year       |  | $    | 2,259 |      |  | $ | 1,723 |  
|                                        |  |      |       |      |  |   |       |  

The following schedule reconciles the status of the Companys plan with
the unfunded postretirement benefit obligation included in its balance sheets
at December 31:

|                                          |  |      |       |      |  |   |       |  
|----------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|(In $000s)                               |  | 2003 |       | 2002
|                                          |  |      |       |     
|Funded status                             |  | $    | 2,259 |      |  | $ | 1,723 |  
|Unrecognized prior service cost           |  |      | (18   | )    |  |   | (21   | )
|Unrecognized net gain (loss)              |  |      | (488  | )    |  |   | 152   |  
|                                          |  |      |       |      |  |   |       |  
|Accrued postretirement benefit obligation |  | $    | 1,753 |      |  | $ | 1,854 |  
|                                          |  |      |       |      |  |   |       |  

The weighted-average discount rate is 6.25% and 6.75% for 2003 and 2002,
respectively. At December 31, 2003, a 5.5% annual rate of increase in the per
capita cost of covered medical benefits was assumed for 2004. The rate was to
remain at 5.5% in 2004 and thereafter. At December 31, 2002, a 5.5% annual
rate of increase in the per capita cost of covered medical benefits was assumed
for 2003. The rate was to remain at 5.5% in 2003 and thereafter. Assumed
health care cost trend rates have a significant effect on the amounts reported
for the medical plans. The Company expects its contributions to the Plan for
the year 2004 to be approximately $226,000.

A one-percentage-point change in assumed health care cost trend rates
would have the following effects:

|                                                        |  |             |   |             |  |   |    |  
|------------------------------------------------------- |  | ----------- | - | ----------- |  | - | -- | -
|(In $000s)                                             |  | 1% Increase |   | 1% Decrease
|                                                        |  |             |   |            
|Effect on total of service
and interest rate
components |  | $           | 1 |             |  | $ | (1 | )
|Effect on postretirement
benefit obligation             |  | $           | 6 |             |  | $ | (6 | )

The Company has a retirement and savings plan for substantially all of its
employees. The Plan has features of both a profit sharing plan and a voluntary
thrift plan qualified under Section 401(k) of the Internal Revenue Code. The
profit sharing component of the Plan allows for contributions to be made to the
Plan at the discretion of the Board of Directors, of which up to 50% may be
made in the form of Company common stock. Contributions for this component of
the Plan were $2,997,000, $3,022,000, and $2,975,000 in 2003, 2002, and 2001,
respectively. The 401(k) component of the Plan allows employees to contribute
to the Plan and the Company will make a matching contribution of up to 3% of
the employees compensation. The Companys matching contribution percentage
may be changed at the discretion of the Companys Board of Directors. The
Companys contributions for this component of the Plan were $1,619,000,
$1,551,000, and $1,214,000 in 2003, 2002, and 2001, respectively.

9. Stock Ownership and Stock Option Plans

The Company has a Performance Incentive Compensation Program (the
Program) which provides that the Compensation Committee of the Board of
Directors may grant: (a) incentive stock options within the meaning of Section
422 of the Internal Revenue Code; (b) non-qualified stock options; (c)
performance units; (d) awards of restricted shares of the Companys common
stock; (e) awards of unrestricted shares of the Companys common stock; (f)
phantom stock units; (g) or any combination of the foregoing to outside
directors, officers and key employees provided, however, that non-employee
directors are not eligible to receive incentive stock options. Only common
stock, not to exceed 5,000,000 shares, may be delivered under the Program;
shares so delivered will be made available from the authorized but unissued
shares or from shares reacquired by the Company, including shares purchased in
the open market. The aggregate number of shares that may be acquired by any
participant in the Program is limited to a maximum of 400,000 stock options
during a single calendar year and a maximum of 100,000 shares of other
stock-based awards during a single calendar year. As of December 31, 2003, 51
employees, officers and outside directors were participants in the Program.

Restricted shares awarded to participants under the Program generally vest
either in equal annual installments or as a lump sum, generally over a
five-year period commencing on the date the shares are awarded. Vesting of
restricted shares may be contingent on the achievement of certain performance
goals as established by the Compensation Committee at the time of the grant.
Non-vested shares may not be assigned, transferred, pledged or otherwise
encumbered or disposed of. During the applicable restriction period, the
Company retains possession of the restricted shares. Participants are entitled
to dividends and voting rights with respect to the restricted shares.

Stock options under the Program are issued at least at 100% of the market
price on the date of grant, are vested over such period of time, which
generally may not be less than one year, as may be established by the
Compensation Committee, and expire no more than ten years after the grant.

Of the non-qualified options outstanding, 562,958 were exercisable at
December 31, 2003; 454,259 were exercisable at December 31, 2002; and 305,278
were exercisable at December 31, 2001. The options expire on various dates
beginning May 7, 2004, and ending June 13, 2012.

In accordance with the provisions of SFAS No. 123, Accounting for
Stock-Based Compensation, the Company has elected to

26



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES

follow Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB No. 25) and related interpretations in accounting
for its plans and does not recognize compensation expense for its stock-based
compensation plans other than for awards of restricted shares. Expense is
recognized over the vesting period of the restricted shares. Expense related
to restricted shares totaled $1,928,000, $990,000, and $757,000 for the years
ended December 31, 2003, 2002, and 2001 respectively.

Under APB No. 25, because the exercise price of the Companys employee
stock options at least equals the market price of the underlying stock on the
date of the grant, no compensation expense is recognized. Pro forma
information regarding net income and earnings per share is required by SFAS No.
123, and is determined as if the Company accounted for its employee stock
options under the fair value method of that statement.

The Company granted no stock options during 2003. The weighted average
grant-date estimated fair value of grants during 2002 and 2001 using a
Black-Scholes option valuation model, and the weighted average assumptions used
to determine the estimated fair value were as follows:

|                                                               |                                 |   |         |      |      |         |      |      |  
|-------------------------------------------------------------- | ------------------------------- | - | ------- | ---- | ---- | ------- | ---- | ---- | -
|                                                               |                                 |   | 2002    |      | 2001
|                                                               |                                 |   |         |      |     
|Estimated fair value                                           |                                 | $ | 9.55    |      |      | $       | 8.27 |     
|Underlying assumptions used to determine estimated
fair value: |                                 |   |         |      |      |         |      |     
|                                                               | Risk free interest rate         |   |         | 4.40 | %    |         |      | 4.88 | %
|                                                               | Dividend yield                  |   |         | 2.2  | %    |         |      | 2.6  | %
|                                                               | Expected stock price volatility |   |         | 0.23 |      |         |      | 0.23 |  
|                                                               | Weighted average expected life  |   | 6 years |      |      | 7 years |     

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility.

Because the Companys employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value estimate,
in managements opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options vesting periods. The
Companys pro forma information is as follows:

|                                                                    |                             |      |       |        |  |      |      |         |   |   |      |        | 
|------------------------------------------------------------------- | --------------------------- | ---- | ----- | ------ |  | ---- | ---- | ------- | - | - | ---- | ------ | 
|(In
$000s, except per share amounts)                               |                             | 2003 |       | 2002   |  | 2001
|                                                                    |                             |      |       |        |  |     
|Stock-based compensation cost
included in net income (net of
taxes) |                             | $    | 1,205 |        |  | $    | 619  |         |   | $ | 469  |       
|                                                                    |                             |      |       |        |  |      |      |         |   |   |      |       
|Net income (loss):                                                  |                             |      |       |        |  |      |      |         |   |   |      |       
|                                                                    | As Reported                 |      | $     | 23,897 |  |      | $    | (14,393 | ) |   | $    | 16,576 | 
|Pro forma compensation expense (net
of taxes)                       |                             |      | (774  | )      |  |      | (901 | )       |   |   | (688 | )     
|                                                                    |                             |      |       |        |  |      |      |         |   |   |      |       
|                                                                    | Pro forma net income (loss) |      | $     | 23,123 |  |      | $    | (15,294 | ) |   | $    | 15,888 | 
|                                                                    |                             |      |       |        |  |      |      |         |   |   |      |       
|Basic Earnings (Loss) per Share:                                    |                             |      |       |        |  |      |      |         |   |   |      |       
|                                                                    | As Reported                 |      | $     | 1.25   |  |      | $    | (0.73   | ) |   | $    | 0.85   | 
|                                                                    | Pro forma                   |      |       | 1.21   |  |      |      | (0.78   | ) |   |      | 0.81   | 
|Diluted Earnings (Loss) per Share:                                  |                             |      |       |        |  |      |      |         |   |   |      |       
|                                                                    | As Reported                 |      | $     | 1.24   |  |      | $    | (0.73   | ) |   | $    | 0.84   | 
|                                                                    | Pro forma                   |      |       | 1.20   |  |      |      | (0.78   | ) |   |      | 0.81   | 

The following table summarizes activity in the Program during the three
years ending December 31, 2003:

|                                 |  |                   |         |               |  |            |       |          |  |               |           |   |  |   |       | 
|-------------------------------- |  | ----------------- | ------- | ------------- |  | ---------- | ----- | -------- |  | ------------- | --------- | - |  | - | ----- | 
|                                 |  |                   |         |               |  |            |       |          |  | Non-Qualified
|                                 |  | Restricted Shares |         | Stock Options
|                                 |  |                   |         |              
|                                 |  |                   |         |               |  | Market     |       |          |  |               |           |   |  |  
|                                 |  | Number            |         | Price at      |  |            |       |          |  | Average      
|                                 |  | of                |         | Date          |  | Number     |       | Exercise
|                                 |  | Shares            |         | Given         |  | of Options |       | Price   
|                                 |  |                   |         |               |  |            |       |         
|Outstanding at
January 1, 2001   |  |                   |        |               |  |            |       |          |  |               | 1,005,925 |   |  | $ | 37.86 | 
|Awarded                          |  |                   | 125,000 |               |  | $          | 35.55 |          |  |               | 857,000   |   |  | $ | 33.54 | 
|Vested                           |  |                   |        |               |  |            |      |          |  |               |           |   |  |   |       | 
|Exercised                        |  |                   |         |               |  |            |       |          |  |               | (326,180  | ) |  | $ | 29.91 | 
|Forfeited                        |  |                   |        |               |  |            |      |          |  |               | (392,207  | ) |  | $ | 43.57 | 
|                                 |  |                   |         |               |  |            |       |          |  |               |           |   |  |   |       | 
|Outstanding at
December 31, 2001 |  |                   | 125,000 |               |  |            |       |          |  |               | 1,144,538 |   |  | $ | 34.94 | 
|Awarded                          |  |                   | 32,500  |               |  | $          | 34.00 |          |  |               | 35,100    |   |  | $ | 39.50 | 
|Vested                           |  |                   | (25,000 | )             |  | $          | 35.55 |          |  |               |           |   |  |   |       | 
|Exercised                        |  |                   |         |               |  |            |       |          |  |               | (27,344   | ) |  | $ | 33.44 | 
|Forfeited                        |  |                   |        |               |  |            |      |          |  |               | (4,550    | ) |  | $ | 45.50 | 
|                                 |  |                   |         |               |  |            |       |          |  |               |           |   |  |   |       | 
|Outstanding at
December 31, 2002 |  |                   | 132,500 |               |  |            |       |          |  |               | 1,147,744 |   |  | $ | 35.07 | 
|Awarded                          |  |                   | 60,300  |               |  | $          | 42.07 |          |  |               |           |   |  |   |       | 
|Vested                           |  |                   | (46,300 | )             |  | $          | 39.98 |          |  |               |           |   |  |   |       | 
|Exercised                        |  |                   |         |               |  |            |       |          |  |               | (45,184   | ) |  | $ | 34.99 | 
|Forfeited                        |  |                   |        |               |  |            |      |          |  |               | (68,350   | ) |  | $ | 34.83 | 
|                                 |  |                   |         |               |  |            |       |          |  |               |           |   |  |   |       | 
|Outstanding at
December 31, 2003 |  |                   | 146,500 |               |  |            |       |          |  |               | 1,034,210 |   |  | $ | 35.09 | 
|                                 |  |                   |         |               |  |            |       |          |  |               |           |   |  |   |       | 

The following table summarizes information concerning currently
outstanding and exercisable stock options:

|                      |  |          |           |           |  |          |      |          |  |          |       |  |  |      |         |  |  |   |       | 
|--------------------- |  | -------- | --------- | --------- |  | -------- | ---- | -------- |  | -------- | ----- |  |  | ---- | ------- |  |  | - | ----- | 
|                      |  |          |           |           |  | Wtd.     |      | Wtd.     |  |          |       |  |  | Wtd.
|                      |  | Number   |           | Avg.      |  | Avg.     |      | Number   |  | Avg.    
|Range of              |  | Out-     |           | Remaining |  | Exercise |      | Exercis- |  | Exercise
|Exercise Prices       |  | standing |           | Life      |  | Price    |      | able     |  | Price   
|                      |  |          |           |           |  |          |      |          |  |         
|$25.75 - $29.99       |  |          | 15,000    |           |  |          | 0.39 |          |  | $        | 25.75 |  |  |      | 15,000  |  |  | $ | 25.75 | 
|$30.00 - $39.99       |  |          | 853,850   |           |  |          | 6.98 |          |  | $        | 33.81 |  |  |      | 382,598 |  |  | $ | 33.62 | 
|$40.00 - $51.88       |  |          | 165,360   |           |  |          | 3.93 |          |  | $        | 42.60 |  |  |      | 165,360 |  |  | $ | 42.60 | 
|                      |  |          |           |           |  |          |      |          |  |          |       |  |  |      |         |  |  |   |       | 
|Total or
wtd. average |  |          | 1,034,210 |           |  |          | 6.39 |          |  | $        | 35.09 |  |  |      | 562,958 |  |  | $ | 36.09 | 
|                      |  |          |           |           |  |          |      |          |  |          |       |  |  |      |         |  |  |   |       | 

At December 31, 2003, there were 669,138 shares of the Companys stock
reserved for future grants under the Program.

10. Provision for Income Taxes

The provision for income taxes from continuing operations consists of the
following:

|                                                      |                 |      |        |        |  |      |         |        |  |   |        |       | 
|----------------------------------------------------- | --------------- | ---- | ------ | ------ |  | ---- | ------- | ------ |  | - | ------ | ----- | 
|(In
$000s)                                           |                 | 2003 |        | 2002   |  | 2001
|                                                      |                 |      |        |        |  |     
|Current:                                              |                 |      |        |        |  |      |         |        |  |   |        |      
|                                                      | Federal         |      | $      | 10,614 |  |      | $       | 7,274  |  |   | $      |      | 
|                                                      | State and local |      |        | 1,572  |  |      |         | 622    |  |   |        | 663   | 
|                                                      |                 |      |        |        |  |      |         |        |  |   |        |       | 
|Total current                                         |                 |      | 12,186 |        |  |      | 7,896   |        |  |   | 663    |      
|Deferred:                                             |                 |      |        |        |  |      |         |        |  |   |        |      
|                                                      | Federal         |      |        | 2,052  |  |      |         | 10,960 |  |   |        | 8,747 | 
|                                                      | State and local |      |        | 101    |  |      |         | 940    |  |   |        | 750   | 
|                                                      |                 |      |        |        |  |      |         |        |  |   |        |       | 
|Total deferred                                        |                 |      | 2,153  |        |  |      | 11,900  |        |  |   | 9,497  |      
|                                                      |                 |      |        |        |  |      |         |        |  |   |        |       | 
|Total tax provision                                   |                 | $    | 14,339 |        |  | $    | 19,796  |        |  | $ | 10,160 |      
|                                                      |                 |      |        |        |  |      |         |        |  |   |        |       | 
|Cumulative effect of a
change in accounting
principle |                 | $    |       |        |  | $    | (29,045 | )      |  | $ |       |      

Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial

27



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES

reporting purposes and the amounts used for income tax purposes. In
addition, accruals for potential tax exposure items are included in the
deferred income tax liabilities.

Significant components of the Companys deferred tax liabilities and
assets as of December 31, 2003 and 2002 are as follows:

|                               |                                                  |      |         |        |   |   |         |        |  
|------------------------------ | ------------------------------------------------ | ---- | ------- | ------ | - | - | ------- | ------ | -
|(In
$000s)                    |                                                  | 2003 |         | 2002  
|                               |                                                  |      |         |       
|Deferred tax liabilities:      |                                                  |      |         |        |   |   |         |       
|                               | Basis in fixed assets                            |      | $       | 12,603 |   |   | $       | 11,837 |  
|                               | Basis in intangible assets                       |      |         | 91,272 |   |   |         | 88,243 |  
|                               | Basis in partnerships                            |      |         |       |   |   |         | 411    |  
|                               |                                                  |      |         |        |   |   |         |        |  
|Total deferred tax liabilities |                                                  |      | 103,875 |        |   |   | 100,491 |       
|Deferred tax assets:           |                                                  |      |         |        |   |   |         |       
|                               | Bad debts                                        |      |         | 657    |   |   |         | 839    |  
|                               | Net operating losses/tax credits/
capital losses |      |         | 8,097  |   |   |         | 8,607  |  
|                               | Employee benefits                                |      |         | 3,936  |   |   |         | 1,582  |  
|                               | Impairment of assets                             |      |         | 357    |   |   |         | 2,046  |  
|                               | Unearned revenue                                 |      |         | 4,458  |   |   |         | 2,178  |  
|                               | Book over tax partnership losses                 |      |         | 586    |   |   |         |       |  
|                               | Other, net                                       |      |         |       |   |   |         | 550    |  
|                               | Valuation reserves                               |      |         | (1,450 | ) |   |         | (1,450 | )
|                               |                                                  |      |         |        |   |   |         |        |  
|Total deferred tax assets      |                                                  |      | 16,641  |        |   |   | 14,352  |       
|                               |                                                  |      |         |        |   |   |         |        |  
|Net deferred tax liability     |                                                  | $    | 87,234  |        |   | $ | 86,139  |       
|                               |                                                  |      |         |        |   |   |         |        |  

The following table reconciles income tax from continuing operations
computed at the U.S. federal statutory tax rates to income tax expense:

|                                        |  |      |        |      |  |      |        |   |  |   |        |  
|--------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|(In $000s)                             |  | 2003 |        | 2002 |  | 2001
|                                        |  |      |        |      |  |     
|Federal income tax rate                 |  |      | 35     | %    |  |      | 35     | % |  |   | 35     | %
|Rate applied to pre-tax income          |  | $    | 13,383 |      |  | $    | 18,476 |   |  | $ | 9,358  |  
|State taxes, net of federal tax
benefit |  |      | 2,118  |      |  |      | 2,275  |   |  |   | 1,503  |  
|Tax credits                             |  |      | (1,331 | )    |  |      | (1,000 | ) |  |   | (1,200 | )
|Other                                   |  |      | 169    |      |  |      | 45     |   |  |   | 499    |  
|                                        |  |      |        |      |  |      |        |   |  |   |        |  
|Provision for income taxes              |  | $    | 14,339 |      |  | $    | 19,796 |   |  | $ | 10,160 |  
|                                        |  |      |        |      |  |      |        |   |  |   |        |  

As of December 31, 2003, the Company has federal operating loss
carryforwards of approximately $1,277,000. These were acquired by the Company
through the purchase of WWAY-TV in December, 1998, and expire in 2015. They
will be utilized against future earnings, but are limited to $1,600,000 per
year. The Company also has state operating loss carryforwards of approximately
$122,883,000 expiring from 2004 to 2017. The Company utilized state operating
loss carryforwards of approximately $21,460,000 and $27,000,000 in 2003 and
2002, respectively. Income taxes paid were approximately $8,176,000,
$8,954,000, and $663,000 in 2003, 2002, and 2001, respectively.

11. Quarterly Results of Operations (Unaudited)

During the fourth quarter of 2003, the Company changed the estimates of
the useful lives used to account for back-up and redundant equipment. The new
estimate results in the retirement of all assets that have not been utilized in
the last twelve to twenty-four months. The change in estimate resulted in a
charge of $671,000 in the fourth quarter of 2003.

Quarterly results of operations for each of the years ended December 31,
2003 and 2002 are as follows:

|                                   |  |                    |        |         |  |          |        |         |  |   |        |  |  |   |        | 
|---------------------------------- |  | ------------------ | ------ | ------- |  | -------- | ------ | ------- |  | - | ------ |  |  | - | ------ | 
|                                   |  | Quarter Ended 2003
|                                   |  |                   
|(In $000s, except per share
data) |  | March 31           |        | June 30 |  | Sept. 30 |        | Dec. 31
|                                   |  |                    |        |         |  |          |        |        
|Net revenues                       |  | $                  | 43,929 |         |  | $        | 51,666 |         |  | $ | 49,075 |  |  | $ | 55,614 | 
|Operating income                   |  | $                  | 5,472  |         |  | $        | 11,512 |         |  | $ | 9,116  |  |  | $ | 12,484 | 
|Net income                         |  | $                  | 3,355  |         |  | $        | 6,792  |         |  | $ | 6,119  |  |  | $ | 7,631  | 
|Basic earnings
per share           |  | $                  | 0.17   |         |  | $        | 0.36   |         |  | $ | 0.32   |  |  | $ | 0.40   | 
|Diluted earnings per
share         |  | $                  | 0.17   |         |  | $        | 0.35   |         |  | $ | 0.32   |  |  | $ | 0.40   | 

|                                                                        |  |                    |         |         |  |          |        |         |  |   |        |  |  |   |        | 
|----------------------------------------------------------------------- |  | ------------------ | ------- | ------- |  | -------- | ------ | ------- |  | - | ------ |  |  | - | ------ | 
|                                                                        |  | Quarter Ended 2002
|                                                                        |  |                   
|(In $000s, except per share data)                                      |  | March 31           |         | June 30 |  | Sept. 30 |        | Dec. 31
|                                                                        |  |                    |         |         |  |          |        |        
|Net revenues                                                            |  | $                  | 42,826  |         |  | $        | 51,805 |         |  | $ | 50,166 |  |  | $ | 61,881 | 
|Operating income                                                        |  | $                  | 6,592   |         |  | $        | 14,059 |         |  | $ | 11,596 |  |  | $ | 19,928 | 
|Income before the
cumulative effect of
a change in
accounting principle |  | $                  | 4,088   |         |  | $        | 8,840  |         |  | $ | 7,177  |  |  | $ | 12,890 | 
|Cumulative effect of
a change in
accounting principle                   |  | $                  | (47,388 | )       |  |          |       |         |  |   |       |  |  |   |       | 
|Net income (loss)                                                       |  | $                  | (43,300 | )       |  | $        | 8,840  |         |  | $ | 7,177  |  |  | $ | 12,890 | 
|Basic earnings (loss)
per share                                         |  | $                  | (2.21   | )       |  | $        | 0.45   |         |  | $ | 0.37   |  |  | $ | 0.66   | 
|Diluted earnings
(loss) per share                                       |  | $                  | (2.19   | )       |  | $        | 0.44   |         |  | $ | 0.36   |  |  | $ | 0.66   | 

12. Earnings Per Share

The following tables reconcile the numerators and denominators for the
basic and diluted earnings from continuing operations per share calculations
for the years ended December 31, 2003, 2002, and 2001:

|                                                                                                                                  |               |                    |        |         |  |         |        |       |  |   |      |  | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------- | ------------------ | ------ | ------- |  | ------- | ------ | ----- |  | - | ---- |  | 
|(In
$000s, except per share data)                                                                                                |               |                    |        |         |  | Shares  |        | Per  
|                                                                                                                                  |               |                    |        |         |  | (Denom- |        | Share
|For the Year Ended 2003                                                                                                           |               | Income (Numerator) |        | inator) |  | Amount 
|                                                                                                                                  |               |                    |        |         |  |        
|Basic EPS:                                                                                                                        |               |                    |        |         |  |         |        |       |  |   |      | 
|Income before the cumulative
effect of a change in
accounting principle
available to common
shareholders                          |               |                    | 23,898 |         |  |         | 19,123 |       |  | $ | 1.25 | 
|                                                                                                                                  |               |                    |        |         |  |         |        |       |  |   |      | 
|Effect of Dilutive Securities:                                                                                                    |               |                    |        |         |  |         |        |       |  |   |      | 
|                                                                                                                                  | Stock options |                    |        |        |  |         |        | 125   |  |   |      |  | 
|                                                                                                                                  |               |                    |        |         |  |         |        |       |  |   |      | 
|Diluted EPS:                                                                                                                      |               |                    |        |         |  |         |        |       |  |   |      | 
|Income before the cumulative
effect of a change in
accounting principle
available to common
shareholders plus assumed
conversions |               | $                  | 23,898 |         |  |         | 19,248 |       |  | $ | 1.24 | 
|                                                                                                                                  |               |                    |        |         |  |         |        |       |  |   |      | 

28



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES

|                                                                                                                                  |               |             |        |         |         |        |        |     |  |   |      |  | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------- | ----------- | ------ | ------- | ------- | ------ | ------ | --- |  | - | ---- |  | 
|(In
$000s, except per share data)                                                                                                |               |             |        |         |         | Shares |        | Per
|                                                                                                                                  |               |             | Income |         | (Denom- |        | Share 
|For the Year Ended 2002                                                                                                           |               | (Numerator) |        | inator) |         | Amount
|                                                                                                                                  |               |             |        |         |         |       
|Basic EPS:                                                                                                                        |               |             |        |         |         |        |        |     |  |   |      | 
|Income before the cumulative
effect of a change in
accounting principle
available to common
shareholders                          |               |             | 32,995 |         |         |        | 19,610 |     |  | $ | 1.68 | 
|                                                                                                                                  |               |             |        |         |         |        |        |     |  |   |      | 
|Effect of Dilutive Securities:                                                                                                    |               |             |        |         |         |        |        |     |  |   |      | 
|                                                                                                                                  | Stock options |             |        |        |         |        |        | 84  |  |   |      |  | 
|                                                                                                                                  |               |             |        |         |         |        |        |     |  |   |      | 
|Diluted EPS:                                                                                                                      |               |             |        |         |         |        |        |     |  |   |      | 
|Income before the cumulative
effect of a change in
accounting principle
available to common
shareholders plus assumed
conversions |               | $           | 32,995 |         |         |        | 19,694 |     |  | $ | 1.68 | 
|                                                                                                                                  |               |             |        |         |         |        |        |     |  |   |      | 

|                                                                                                                                  |               |             |        |         |         |        |        |     |  |   |      |  | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------- | ----------- | ------ | ------- | ------- | ------ | ------ | --- |  | - | ---- |  | 
|(In $000s, except per share data)                                                                                                |               |             |        |         |         | Shares |        | Per
|                                                                                                                                  |               |             | Income |         | (Denom- |        | Share 
|For the Year Ended 2001                                                                                                           |               | (Numerator) |        | inator) |         | Amount
|                                                                                                                                  |               |             |        |         |         |       
|Basic EPS:                                                                                                                        |               |             |        |         |         |        |        |     |  |   |      | 
|Income before the cumulative
effect of a change in
accounting principle
available to common
shareholders                          |               |             | 16,576 |         |         |        | 19,581 |     |  | $ | 0.85 | 
|                                                                                                                                  |               |             |        |         |         |        |        |     |  |   |      | 
|Effect of Dilutive Securities:                                                                                                    |               |             |        |         |         |        |        |     |  |   |      | 
|                                                                                                                                  | Stock options |             |        |        |         |        |        | 99  |  |   |      |  | 
|Diluted EPS:                                                                                                                      |               |             |        |         |         |        |        |     |  |   |      | 
|Income before the cumulative
effect of a change in
accounting principle
available to common
shareholders plus assumed
conversions |               | $           | 16,576 |         |         |        | 19,680 |     |  | $ | 0.84 | 
|                                                                                                                                  |               |             |        |         |         |        |        |     |  |   |      | 

The diluted income from continuing operations per common share calculation
excludes the effect of potentially dilutive shares when the inclusion of those
shares in the calculation would have an anti-dilutive effect.

13. Fair Values of Financial Instruments

SFAS No. 107, Disclosures about Fair Value of Financial Instruments
requires the disclosure of the estimated fair value of all financial
instruments, including both assets and liabilities, unless specifically
exempted. The following methods were used to estimate the fair values of the
Companys financial instruments.



| |  | Cash and cash equivalents: The carrying amounts reported in the
balance sheet for these instruments approximate their fair values.                                                                                                                                                                                                                                                                            
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Receivables, income taxes receivable, and accounts payable: The
carrying amounts reported in the balance sheet for these instruments
approximate their fair value due to the short maturity of these items.                                                                                                                                                                                                   
| 
| |  | Program contract obligations: Fair values on program contract obligations are
estimated to approximate their carrying value as a result of their short term
nature.                                                                                                                                                                                                                                           
| 
| |  | Private debt securities: The carrying amounts
reported in the balance sheet for these securities
approximate their fair value. Fair values are
estimated by discounting the expected future cash
flows using a current market rate applicable to the
yield, credit quality, and maturity of the
investments.                                                                                                  
| 
| |  | Marketable equity securities: The fair values for the
available-for-sale marketable equity securities are
based on quoted market prices.                                                                                                                                                                                                                                                                      
| 
| |  | Investments in private equity securities, venture
capital funds, and low income housing tax credits:
The Company determined that it was not practicable to
estimate the fair values of its private equity,
venture capital and low income housing tax credit
investments because of a lack of primary and
secondary market prices and the inability to estimate
fair values without incurring excessive costs.

14. Comprehensive Income

The components of other comprehensive income (loss) and the related tax
effects, for the years 2003, 2002, and 2001 are as follows:

|                                                                    |  |        |     |           |  |        |      |   |  |   |     | 
|------------------------------------------------------------------- |  | ------ | --- | --------- |  | ------ | ---- | - |  | - | --- | 
|(In $000s)                                                         |  |        |     |           |  | Income |      |   |  |  
|                                                                    |  | Amount |     | Tax       |  | Amount
|For the Year Ended                                                  |  | Before |     | (Expense) |  | Net of
|December 31, 2003                                                   |  | Taxes  |     | Benefit   |  | Taxes 
|                                                                    |  |        |     |           |  |       
|Unrealized gain on
available for sale
securities                    |  | $      | 384 |           |  | $      | (146 | ) |  | $ | 238 | 
|Less: reclassification
adjustment for losses
realized in net income |  |        |    |           |  |        |     |   |  |   |    | 
|                                                                    |  |        |     |           |  |        |      |   |  |   |     | 
|Net unrealized income (loss)                                        |  | $      | 384 |           |  | $      | (146 | ) |  | $ | 238 | 
|                                                                    |  |        |     |           |  |        |      |   |  |   |     | 
|Total comprehensive income
(loss)                                   |  | $      | 384 |           |  | $      | (146 | ) |  | $ | 238 | 
|                                                                    |  |        |     |           |  |        |      |   |  |   |     | 

|                                                                    |  |        |      |           |  |        |      |   |  |   |     |  
|------------------------------------------------------------------- |  | ------ | ---- | --------- |  | ------ | ---- | - |  | - | --- | -
|(In $000s)                                                         |  |        |      |           |  | Income |      |   |  |  
|                                                                    |  | Amount |      | Tax       |  | Amount
|For the Year Ended                                                  |  | Before |      | (Expense) |  | Net of
|December 31, 2002                                                   |  | Taxes  |      | Benefit   |  | Taxes 
|                                                                    |  |        |      |           |  |       
|Unrealized gain on
available for sale
securities                    |  | $      | 380  |           |  | $      | (144 | ) |  | $ | 236 |  
|Less: reclassification
adjustment for losses
realized in net income |  |        | (101 | )         |  |        | 38   |   |  |   | (63 | )
|                                                                    |  |        |      |           |  |        |      |   |  |   |     |  
|Net unrealized income (loss)                                        |  | $      | 279  |           |  | $      | (106 | ) |  | $ | 173 |  
|                                                                    |  |        |      |           |  |        |      |   |  |   |     |  
|Total comprehensive income
(loss)                                   |  | $      | 279  |           |  | $      | (106 | ) |  | $ | 173 |  
|                                                                    |  |        |      |           |  |        |      |   |  |   |     |  

|                                                                   |  |        |        |           |  |        |      |   |  |   |      |  
|------------------------------------------------------------------ |  | ------ | ------ | --------- |  | ------ | ---- | - |  | - | ---- | -
|(In $000s)                                                        |  |        |        |           |  | Income |      |   |  |  
|                                                                   |  | Amount |        | Tax       |  | Amount
|For the Year Ended                                                 |  | Before |        | (Expense) |  | Net of
|December 31, 2001                                                  |  | Taxes  |        | Benefit   |  | Taxes 
|                                                                   |  |        |        |           |  |       
|Unrealized gain on
available for sale
securities                   |  | $      | 1,029  |           |  | $      | (391 | ) |  | $ | 638  |  
|Less: reclassification
adjustment for gains
realized in net income |  |        | (1,130 | )         |  |        | 429  |   |  |   | (701 | )
|                                                                   |  |        |        |           |  |        |      |   |  |   |      |  
|Net unrealized income                                              |  | $      | (101   | )         |  | $      | 38   |   |  | $ | (63  | )
|                                                                   |  |        |        |           |  |        |      |   |  |   |      |  
|Total comprehensive income
(loss)                                  |  | $      | (101   | )         |  | $      | 38   |   |  | $ | (63  | )
|                                                                   |  |        |        |           |  |        |      |   |  |   |      |  

29



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES

15. Segment Information

The Company operates primarily in the television broadcasting and cable
advertising businesses. The Company currently owns and operates fifteen
television stations, located principally in the Southeast and Midwest. Each of
the stations is affiliated with a major network, with eight NBC affiliates,
five ABC affiliates, and two CBS affiliates. The Company evaluates segment
performance based on operating income, excluding unusual or non-operating
items.

The following tables summarize financial information by segment for the
periods ended December 31, 2003, 2002, and 2001, respectively:

|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |         | 
|---------------------------------------------------------------------------------------- | ----------------------------- | ------------ | ------- | ------- |  | ------- | ------ | ------ |  | --------- | ------- | ------ |  | - | ------- | ------- | 
|(In
$000s)                                                                              |                               |              |         |         |  |         |        |        |  |           |         |        |  |  
|As of and For the Year                                                                   |                               |              |         |         |  |         |        |        |  | Corporate |         |        |  |  
|Ended December 31, 2003                                                                  |                               | Broadcasting |         | Cable   |  | & Other |        | Total 
|                                                                                         |                               |              |         |         |  |         |        |       
|Revenues (net of
commissions)                                                            |                               | $            | 184,636 |         |  | $       | 15,334 |        |  | $         | 314     |        |  | $ | 200,284 |        
|Expenses:                                                                                |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|                                                                                         | Operating                     |              |         | 115,799 |  |         |        | 12,800 |  |           |         | 14,639 |  |   |         | 143,238 | 
|                                                                                         | Depreciation and
amortization |              |         | 16,170  |  |         |        | 544    |  |           |         | 1,748  |  |   |         | 18,462  | 
|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|Total operating expenses                                                                 |                               |              | 131,969 |         |  |         | 13,344 |        |  |           | 16,387  |        |  |   | 161,700 |        
|Operating income (loss)                                                                  |                               |              | 52,667  |         |  |         | 1,990  |        |  |           | (16,073 | )      |  |   | 38,584  |        
|Net investment income
(loss)                                                             |                               |              |         |         |  |         |        |        |  |           | (348    | )      |  |   | (348    | )      
|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|Income before income taxes
and the cumulative effect
of a change in accounting
principle |                               |              |         |         |  |         |        |        |  |           |         |        |  | $ | 38,236  |        
|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|Segment assets                                                                           |                               | $            | 599,089 |         |  | $       | 4,489  |        |  | $         | 58,687  |        |  | $ | 662,265 |        
|Expenditures for
property, plant, and
equipment                                          |                               | $            | 20,755  |         |  | $       | 289    |        |  | $         | 927     |        |  | $ | 21,971  |        

|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |         | 
|---------------------------------------------------------------------------------------- | ----------------------------- | ------------ | ------- | ------- |  | ------- | ------ | ------ |  | --------- | ------- | ------ |  | - | ------- | ------- | 
|(In
$000s)                                                                              |                               |              |         |         |  |         |        |        |  |           |         |        |  |  
|As of and For the Year                                                                   |                               |              |         |         |  |         |        |        |  | Corporate |         |        |  |  
|Ended December 31, 2002                                                                  |                               | Broadcasting |         | Cable   |  | & Other |        | Total 
|                                                                                         |                               |              |         |         |  |         |        |       
|Revenues (net of
commissions)                                                            |                               | $            | 190,452 |         |  | $       | 15,816 |        |  | $         | 410     |        |  | $ | 206,678 |        
|Expenses:                                                                                |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|                                                                                         | Operating                     |              |         | 109,655 |  |         |        | 12,916 |  |           |         | 14,170 |  |   |         | 136,741 | 
|                                                                                         | Depreciation and
amortization |              |         | 15,813  |  |         |        | 623    |  |           |         | 1,326  |  |   |         | 17,762  | 
|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|Total operating expenses                                                                 |                               |              | 125,468 |         |  |         | 13,539 |        |  |           | 15,496  |        |  |   | 154,503 |        
|Operating income (loss)                                                                  |                               |              | 64,984  |         |  |         | 2,277  |        |  |           | (15,086 | )      |  |   | 52,175  |        
|Net investment income
(loss)                                                             |                               |              |         |         |  |         |        |        |  |           | 616     |        |  |   | 616     |        
|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|Income before income taxes
and the cumulative effect
of a change in accounting
principle |                               |              |         |         |  |         |        |        |  |           |         |        |  | $ | 52,791  |        
|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|Segment assets                                                                           |                               | $            | 600,419 |         |  | $       | 4,683  |        |  | $         | 65,649  |        |  | $ | 670,751 |        
|Expenditures for
property, plant, and
equipment                                          |                               | $            | 21,472  |         |  | $       | 253    |        |  | $         | 2,979   |        |  | $ | 24,704  |        

|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |         | 
|---------------------------------------------------------------------------------------- | ----------------------------- | ------------ | ------- | ------- |  | ------- | ------ | ------ |  | --------- | ------- | ------ |  | - | ------- | ------- | 
|(In
$000s)                                                                              |                               |              |         |         |  |         |        |        |  |           |         |        |  |  
|As of and For the Year                                                                   |                               |              |         |         |  |         |        |        |  | Corporate |         |        |  |  
|Ended December 31, 2001                                                                  |                               | Broadcasting |         | Cable   |  | & Other |        | Total 
|                                                                                         |                               |              |         |         |  |         |        |       
|Revenues (net of
commissions)                                                            |                               | $            | 165,211 |         |  | $       | 12,144 |        |  | $         | 1,076   |        |  | $ | 178,431 |        
|Expenses:                                                                                |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|                                                                                         | Operating                     |              |         | 100,403 |  |         |        | 11,434 |  |           |         | 11,974 |  |   |         | 123,811 | 
|                                                                                         | Depreciation and
amortization |              |         | 29,453  |  |         |        | 635    |  |           |         | 1,882  |  |   |         | 31,970  | 
|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|Total operating expenses                                                                 |                               |              | 129,856 |         |  |         | 12,069 |        |  |           | 13,856  |        |  |   | 155,781 |        
|Operating income (loss)                                                                  |                               |              | 35,355  |         |  |         | 75     |        |  |           | (12,780 | )      |  |   | 22,650  |        
|Net investment income
(loss)                                                             |                               |              |         |         |  |         |        |        |  |           | 4,086   |        |  |   | 4,086   |        
|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|Income before income taxes
and the cumulative effect
of a change in accounting
principle |                               |              |         |         |  |         |        |        |  |           |         |        |  | $ | 26,736  |        
|                                                                                         |                               |              |         |         |  |         |        |        |  |           |         |        |  |   |         |        
|Segment assets                                                                           |                               | $            | 597,251 |         |  | $       | 5,006  |        |  | $         | 127,938 |        |  | $ | 730,195 |        
|Expenditures for
property, plant, and
equipment                                          |                               | $            | 10,734  |         |  | $       | 643    |        |  | $         | 2,476   |        |  | $ | 13,853  |        

16. Commitments and Contingencies

The Company and its subsidiaries are defendants in various lawsuits
arising in the ordinary course of business. It is the opinion of management
and legal counsel that these actions will not have a material effect on the
financial position or results of operations of the Company. The Company has
lease agreements for broadcast, data processing, and telephone equipment, along
with rent for certain office space. Most of these agreements have optional
renewal provisions covering additional periods of one to ten years. All leases
were made in the ordinary course of business and contain no significant
restrictions or obligations. Annual rental expense amounted to approximately
$1,343,000 $1,023,000 and $871,000 in 2003, 2002, and 2001, respectively.

Future commitments under operating leases are shown below:

|           |  |             |     | 
|---------- |  | ----------- | --- | 
|Year       |  | (In
$000s)
|           |  |            
|2004       |  | $           | 417 | 
|2005       |  |             | 352 | 
|2006       |  |             | 193 | 
|2007       |  |             | 5   | 
|2008       |  |             | 4   | 
|Thereafter |  |             | 7   | 
|           |  |             |     | 
|Total      |  | $           | 978 | 
|           |  |             |     | 

The Company has also entered into commitments for various television
programming rights for which the license periods have not yet commenced. See
the caption Program Contract Obligation included in Note 2 for further
details.

The Company also has committed to make certain investments in its venture
capital funds when called by the funds manager and to provide additional
financing related to certain of its private debt holdings. The Company
anticipates additional funding related to its venture capital portfolio of
$1,038,000 over the next one to three years, and funding of its private debt
and equity holdings of approximately $450,000 during 2004.

30



---



##### 



MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING

The consolidated financial statements included in this Annual Report
have been prepared by management, which is responsible for the integrity
and fair presentation of the financial data and related disclosures. The
consolidated financial statements are in accordance with accounting
principles generally accepted in the United States and necessarily include
amounts that are based on managements estimates and assumptions.
Management believes that the consolidated financial statements fairly
reflect the Companys financial position and results of operations.

To gather and control financial data, the Company maintains accounting
systems supported by internal controls that provide reasonable assurance
over the preparation of reliable financial statements. Management believes
that a high level of internal control is maintained by the selection and
training of qualified personnel and by the establishment and communication
of accounting and business policies.

Ernst & Young LLP, independent auditors, are engaged to audit and to
render an opinion as to whether the Companys financial statements,
considered in the entirety, present the Companys financial condition and
operating results fairly. Their audit is conducted in accordance with
auditing standards generally accepted in the United States, and their
report is included on this page.

The Audit Committee of the Board of Directors, composed of three
outside directors, reviews the Companys accounting and auditing policies
and meets regularly with the Companys independent auditors.

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders
The Liberty Corporation

We have audited the accompanying consolidated balance sheets of The
Liberty Corporation and Subsidiaries as of December 31, 2003 and 2002, and
the related consolidated statements of income, shareholders equity and
cash flows for each of the three years in the period ended December 31,
2003. Our audits also included the financial statement schedule listed in
the index at item 15(a). These financial statements and schedule are the
responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as 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 The Liberty Corporation and Subsidiaries at December 31, 2003
and 2002, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements and schedule
taken as a whole, presents fairly in all material respects the information
set forth therein.

As discussed in Note 4 to the consolidated financial statements, the
Company was required to adopt Financial Accounting Standards Statement No.
142 Goodwill and Other Intangible Assets as of January 1, 2002, and
accordingly changed its method of accounting for goodwill and other
intangible assets.

Greenville, South Carolina
February 3, 2004

31



---



##### 



Item 9. Changes in and Disagreements with Accountant on Accounting and
Financial Disclosure

None.

Item 9A. Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company required to be included in the Companys periodic SEC
filings. There have been no significant changes in the Companys internal
controls or in other factors that could significantly affect internal controls
subsequent to this evaluation.

PART III

Item 10. Directors and Executive Officers of the Registrant

Information concerning Directors of the Company is contained in The
Liberty Corporation Proxy Statement for the May 4, 2004 Annual Meeting of
Shareholders and is incorporated in this Item 10 by reference.

Executive Officers

The following is a list of the Executive Officers of the Registrant
indicating their age and certain biographical data.

|                            |                                                                                                                  
|--------------------------- | -----------------------------------------------------------------------------------------------------------------
|W. HAYNE HIPP, Age 64      
|                            | Chairman of the Board of Liberty since May, 1995                                                                 
|                            | Chairman of the Board of Cosmos since May, 1995                                                                  
|                            | Chief Executive Officer of Liberty since January, 1979                                                           
|                           
|HOWARD L. SCHROTT, Age 49  
|                            | Chief Financial Officer of Liberty since January, 2001                                                           
|                            | Chief Financial Officer of Wink Communications Inc., a provider of complete end-to-end systems for low-cost      
|                            | electronic commerce on television, from May, 1999 to December, 2000                                              
|                            | Chief Financial Officer of Emmis Communications Corporation, a diversified media company, from 1991, to May, 1999
|                           
|JAMES M. KEELOR, Age 61    
|                            | President of Liberty since February, 2002                                                                        
|                            | President of Cosmos since February, 1992                                                                         
|                            | Vice President, Operations, of Cosmos from December, 1989 to February, 1992                                      
|                           
|MARTHA G. WILLIAMS, Age 62 
|                            | Vice President, General Counsel & Secretary of Liberty since January, 1982                                       
|                            | Secretary and Counsel of Cosmos since February, 1982                                                             
|                           
|JONATHAN W. NORWOOD, Age 35
|                            | Controller of Liberty since April, 2001                                                                          
|                            | Chief Financial Officer of TeamVest, a provider of 401(k) retirement plan services, from January, 2000 to        
|                            | March, 2001                                                                                                      
|                            | Director of Finance of TeamVest from March, 1996 to December, 1999                                               

32



---



##### 



Item 11. Executive Compensation

Information concerning Executive Compensation and transactions is
contained in The Liberty Corporation Proxy Statement for the May 4, 2004 Annual
Meeting of Shareholders and is incorporated in this Item 11 by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information concerning Security Ownership of Certain Beneficial Owners and
Management is contained in The Liberty Corporation Proxy Statement for the May
4, 2004 Annual Meeting of Shareholders and is incorporated in this Item 12 by
reference.

Item 13. Certain Relationships and Related Transactions

Information concerning Certain Relationships and Related Transactions is
contained in The Liberty Corporation Proxy Statement for the May 4, 2004 Annual
Meeting of Shareholders and is incorporated in this Item 13 by reference.

Item 14. Principal Accounting Fees and Services

Information concerning Principal Accounting Fees and Services is contained
in The Liberty Corporation Proxy Statement for the May 4, 2004 Annual Meeting
of Shareholders and is incorporated in this Item 14 by reference.

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  (1) and (2). List of Financial Statements and Financial Statement
Schedules

The following consolidated financial statements of The Liberty Corporation
and Subsidiaries for the three years ended December 31, 2003 are submitted in
Part II, Item 8 of this report:

Consolidated Balance Sheets - December 31, 2003 and 2002

Consolidated Statements of Income - For the three years ended December
31, 2003

Consolidated Statements of Shareholders Equity - For the three years
ended December 31, 2003

Consolidated Statements of Cash Flows - For the three years ended
December 31, 2003

Notes to Consolidated Financial Statements - December 31, 2003

Report of Independent Auditors

The following consolidated financial statement schedule of The Liberty
Corporation and Subsidiaries is included in Item 15(d):

II
-   Valuation and Qualifying Accounts and Reserves

All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission, but which are excluded
from this report, are not required under the related instructions or are
inapplicable, and therefore have been omitted.

33



---



##### 



(a)(3). List of Exhibits



| | 3.1  |  | Restated Articles of Incorporation, as amended through May 6, 1997
(filed with the Registrants Quarterly Report on Form 10Q/A for the
period ended March 31, 1997 and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 3.2  |  | Bylaws, as amended through August 3, 1999, filed as Exhibit 3.2 to
the Registrants Form 10-Q for the quarter ended June 30, 1999, and
incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | 4.1  |  | See Articles 4, 5, 7 and 9 of the Companys Restated Articles of
Incorporation (filed as Exhibit 3.1) and Articles I, II and VI of the
Companys Bylaws (filed as Exhibit 3.2).                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | 4.2  |  | See the Form of Rights Agreement dated as of August 7, 1990 between
The Liberty Corporation and The Bank of New York, as Rights Agent,
which includes as Exhibit B thereto the form of Right Certificate
(filed as Exhibits 1 and 2 to the Registrants Form 8-A, dated August
10, 1990, and incorporated herein by reference) with respect to the
Rights to purchase Series A Participating Cumulative Preferred Stock,
and the Registrants Form 8-A, dated October 12, 2000 amending the Form
of Rights Agreement to, among other things, extend the expiration date
to August 7, 2010, also incorporated herein by reference.
|
| | 4.3  |  | See Credit Agreement dated March 21, 2001 (filed as Exhibit 10 to the
Registrants Quarterly Report on Form 10Q for the quarter ended June 30,
2001, and incorporated herein by reference) and the related Fourth
Amendment To Credit Agreement dated May 19, 2003 (filed as Exhibit 10 to
the Registrants Quarterly Report on Form 10Q for the quarter ended June
30, 2003, and incorporated herein by reference)                                                                                                                                                                                                              
|
| | 10.1 |  | See Credit Agreement dated March 21, 2001, and the related Fourth
Amendment to Credit Agreement dated May 19, 2003, (filed as Exhibit
4.3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | 10.2 |  | The Liberty Corporation Performance Incentive Compensation Program,
as amended and restated on February 1, 2000, filed as Exhibit 10.2 to
the Registrants Form 10-Q for the quarter ended March 31, 2000, and
incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                 
|
| | 11.  |  | The Liberty Corporation and Subsidiaries Consolidated Earnings per
Share Computation included in Note 12 of the Notes to Consolidated
Financial Statements filed on page 28 of this report.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | 21.  |  | The Liberty Corporation and Subsidiaries, List of Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | 23.  |  | Consent of Independent Auditors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | 24.  |  | Powers of Attorney applicable for certain signatures of members of
the Board of Directors in Registrants 10-K filed for the years ended
December 31, 1983, 1985, 1989, 1994, 1995, 1996, 1997 1998, 1999, 2000,
and 2001.                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | 31.  |  | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | 32.  |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

34



---



##### 



(b). Reports on Form 8-K



| |  |  | The Company furnished a current report on Form 8-K dated November 4,
2003 with respect to the press release announcing its third quarter
2003 operating results.                                                                                                                                                                             
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The Company furnished a current report on Form 8-K dated November 4,
2003 with respect to The Liberty Corp. declaring a regular quarterly
dividend of 24 cents per share on its common stock, payable on January
5, 2004 to shareholders of record on December 15, 2003                                                                      
|
| |  |  | The Company furnished a current report on Form 8-K dated November 17,
2003 announcing its negotiation and intention to enter into certain
agreements with GNS Media Evansville, Inc. (GNS). These agreements
between Liberty and GNS are contingent upon the closing of GNS
acquisition of WTVW, the FOX affiliate in Evansville, Indiana.

(c). Exhibits Filed With This Report



| | 11. |  | The Liberty Corporation and Subsidiaries Consolidated Earnings per
Share Computation included in Note 12 of the Notes to Consolidated
Financial Statements filed on pages 28-29 of this report.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 21. |  | The Liberty Corporation and Subsidiaries, List of Subsidiaries                                                                                                                                   
|
| | 23. |  | Consent of Independent Auditors                                                                                                                                                                  
|
| | 31. |  | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                                                          
|
| | 32. |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                           

35



---



##### 



(d). Consolidated Financial Statement Schedule Filed With This Report

II-   Valuation and Qualifying Accounts and Reserves - For the Three Years Ended December 31, 2003

THE LIBERTY CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 2003
(In $000s)

|                                                        |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|------------------------------------------------------- |  | ---------- | ----- | ---------- |  | ---------- | ----- | ---------- |  | --------- | - | ---------- |  | - | ----- | --- |  | - | ----- | 
|                                                        |  |            |       |            |  | Additions  |       |            |  |           |   |            |  |  
|                                                        |  |            |       |            |  |            |       |            |  |           |   |            |  |  
|                                                        |  | Balance at |       | Charged to |  | Charged to |       |            |  |           |   | Balance at
|                                                        |  | Beginning  |       | Costs and  |  | Other      |       |            |  |           |   | End       
|Deducted From Asset Accounts                            |  | of Period  |       | Expenses   |  | Accounts   |       | Deductions |  | of Period
|                                                        |  |            |       |            |  |            |       |            |  |          
|Year Ended December 31, 2003                            |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|Accounts receivable -
reserve for bad debts             |  | $          | 1,963 |            |  | $          | 757   |            |  | $         |  |            |  | $ | 982   | (a) |  | $ | 1,738 | 
|                                                        |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|Deferred income taxes -
reserve for deferred tax assets |  | $          | 1,450 |            |  | $          |      |            |  | $         |  |            |  | $ |      |     |  | $ | 1,450 | 
|                                                        |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|Year Ended December 31, 2002                            |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|Accounts receivable -
reserve for bad debts             |  | $          | 2,250 |            |  | $          | 1,215 |            |  | $         |  |            |  | $ | 1,502 | (a) |  | $ | 1,963 | 
|                                                        |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|Deferred income taxes -
reserve for deferred tax assets |  | $          | 1,450 |            |  | $          |      |            |  | $         |  |            |  | $ |      |     |  | $ | 1,450 | 
|                                                        |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|Year Ended December 31, 2001                            |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|Accounts receivable -
reserve for bad debts             |  | $          | 2,218 |            |  | $          | 1,127 |            |  | $         |  |            |  | $ | 1,095 | (a) |  | $ | 2,250 | 
|                                                        |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|Deferred income taxes -
reserve for deferred tax assets |  | $          |      |            |  | $          | 1,450 |            |  | $         |  |            |  | $ |      |     |  | $ | 1,450 | 
|                                                        |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 

Notes:

(a) Uncollectible accounts written off, net of recoveries.

36



---



##### 



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized, as of the 1st day of
March, 2004.

|                        |  |     |  |                        
|----------------------- |  | --- |  | -----------------------
|THE LIBERTY CORPORATION |  | By: |  | /s/ Hayne Hipp         
|                        |  |     |  |                        
|Registrant              |  |     |  | Hayne Hipp             
|                        |  |     |  | Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, as of the 1st day of March, 2004.

|     |  |                           |  |      |  |                         
|---- |  | ------------------------- |  | ---- |  | ------------------------
|By:  |  | /s/ Howard L. Schrott     |  | *By: |  | /s/ Frank E. Melton     
|     |  |                           |  |      |  |                         
|     |  | Howard L. Schrott         |  |      |  | Frank E. Melton         
|     |  | Chief Financial Officer   |  |      |  | Director                
|     |  |                           |  |      |  |                         
|*By: |  | /s/ Edward E. Crutchfield |  | *By: |  | /s/ John H. Mullin III  
|     |  |                           |  |      |  |                         
|     |  | Edward E. Crutchfield     |  |      |  | John H. Mullin III      
|     |  | Director                  |  |      |  | Director                
|     |  |                           |  |      |  |                         
|*By: |  | /s/ John R. Farmer        |  | *By: |  | /s/ J. Thurston Roach   
|     |  |                           |  |      |  |                         
|     |  | John R. Farmer            |  |      |  | J. Thurston Roach       
|     |  | Director                  |  |      |  | Director                
|     |  |                           |  |      |  |                         
|By:  |  | /s/ Hayne Hipp            |  | *By: |  | /s/ Eugene E. Stone, IV 
|     |  |                           |  |      |  |                         
|     |  | Hayne Hipp                |  |      |  | Eugene E. Stone, IV     
|     |  | Director                  |  |      |  | Director                
|     |  |                           |  |      |  |                         
|*By: |  | /s/ William O. McCoy      |  | *By: |  | /s/ William B. Timmerman
|     |  |                           |  |      |  |                         
|     |  | William O. McCoy          |  |      |  | William B. Timmerman    
|     |  | Director                  |  |      |  | Director                
|     |  |                           |  |      |  |                         
|     |  |                           |  | *By: |  | /s/ Martha G. Williams  
|     |  |                           |  |      |  |                         
|     |  |                           |  |      |  | *Martha G. Williams, as 
|     |  |                           |  |      |  | Special Attorney in Fact

37



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##### 



Annual Report on Form 10-K
The Liberty Corporation
December 31, 2003

Index to Exhibits

| |     |  |  |                                                                                                                                                                                                                                   |  |        |       | 
| | --- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ | ----- | 
| |     |  |  |                                                                                                                                                                                                                                   |  | Page  
| |     |  |  | EXHIBITS                                                                                                                                                                                                                          |  | Number
| | 11. |  |  | The Liberty Corporation and Subsidiaries Consolidated Earnings Per Share
Computation (incorporated herein by reference to Note 12 of the Notes to
Consolidated Financial Statements included in Part II Item 8 of this
report). |  |        | 28-29 | 
| | 21. |  |  | The Liberty Corporation and Subsidiaries, List of Significant Subsidiaries                                                                                                                                                        |  |        | 39    | 
| | 23  |  |  | Consent of Independent Auditors                                                                                                                                                                                                   |  |        | 40    | 
| | 31  |  |  | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                                                                                           |  |        | 41-42 | 
| | 32  |  |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                            |  |        | 43    | 

38