##### 



SECURITIES AND EXCHANGE COMMISSIONWashington, 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, 2002                                             
|           |  |                                                                                         
|           |  | 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                                                 |  | 57-0507055                          
|                                                               |  |                                     
|(State or other jurisdiction of incorporation or organization) |  | (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                                 |  | New York Stock Exchange                  
|Rights to Purchase Series A Participating Cumulative Preferred Stock |  | 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 üNo

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. ü

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

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 17, 2003:

|                           |  |             
|-------------------------- |  | ------------
|Common Stock, No Par Value |  | $802,354,014

The number of shares outstanding of each of Registrants classes of common stock as of March 17, 2003:

|                           |  |           
|-------------------------- |  | ----------
|Common Stock, No Par Value |  | 19,162,981

DOCUMENTS INCORPORATED BY REFERENCE

Portions of The Liberty Corporation Proxy Statement for the Annual Meeting
of Shareholders on May 6, 2003 are incorporated into Part III, Items 10, 11,
12, and 13 by reference.

This report is comprised of pages 1 through 45. The exhibit index is on
page 43.





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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 Southeast and Midwest, a cable
advertising company, a video production 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.

Prior to September 29, 2000, the Company was also engaged in the insurance
industry. On September 29, 2000, the Companys shareholders approved the sale
of the Companys insurance operations to the Royal Bank of Canada for $648
million. The sale closed on November 1, 2000. Accordingly, these entities
have been treated as discontinued operations in the accompanying financial
statements.

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.

Recent Developments

On February 29, 2000, the Company completed the acquisition of KCBD, the
NBC affiliate in Lubbock, TX in a cash transaction for $59.8 million. This
purchase was funded using proceeds from the Companys credit facility.

On June 19, 2000, the Company entered into a purchase agreement with Royal
Bank of Canada (RBC), a Canadian-chartered bank, pursuant to which RBC was to
acquire from the Company all of the issued and outstanding shares of capital
stock of the companies comprising its insurance operations, for a total of
approximately $648 million, consisting of a dividend from Liberty Life
Insurance Company of up to $70 million and the balance in cash from RBC. On
September 29, 2000, the Companys shareholders approved the purchase agreement,
and on November 1, 2000 the Company completed the sale to RBC. Accordingly,
these entities have been treated as discontinued operations in the financial
statements included in Item 8 of this report.

On August 25, 2000, the Company completed the redemption of all of the
outstanding shares of its Series 1995-A Cumulative Convertible Preferred Stock.
Shares were called for redemption at $35.00 per share plus accrued dividends
for the period from July 1, 2000 through the Series 1995-A redemption date
(September 5, 2000). Prior to the redemption date, all shares of the 1995-A
Series were converted into common stock.

On November 1, 2000, using proceeds from the sale of its insurance
operations, the Company repaid its revolving credit facility in full.

On December 1, 2000, the Company completed its acquisition of Civic
Communications (Civic). The agreed upon purchase price for all of the
outstanding common stock of Civic was $204 million. The Company used proceeds
from the sale of its insurance operations to fund the transaction. Civic owned
and operated WLBT-TV, the NBC affiliate in Jackson, MS, KLTV-TV, the ABC
affiliate in Tyler, TX, and KTRE-TV, the satellite affiliate of KLTV in Lufkin,
TX.

2



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Television Broadcasting and Related Operations

The following table shows data on the stations owned by the Company as of
December 31, 2002:

|                               |  |         |  |        |     |         |  |             |    |         |  |            |  |         |      |            |  |          |   |         |  |            |      |   |  |  |      |  |  |  |      | 
|------------------------------ |  | ------- |  | ------ | --- | ------- |  | ----------- | -- | ------- |  | ---------- |  | ------- | ---- | ---------- |  | -------- | - | ------- |  | ---------- | ---- | - |  |  | ---- |  |  |  | ---- | 
|                               |  |         |  |        |     |         |  |             |    |         |  |            |  |         |      |            |  |          |   |         |  | 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 |            |  |          | 2 |         |  |            | 0.57 | % |  |  | 1948 |  |  |  | 1981 | 
|Toledo, OH                     |  | WTOL-TV |  |        | 68  |         |  |             | 11 |         |  | CBS        |  |         | 2003 |            |  |          | 1 |         |  |            | 0.41 |   |  |  | 1958 |  |  |  | 1965 | 
|Columbia, SC                   |  | WIS-TV  |  |        | 84  |         |  |             | 10 |         |  | NBC        |  |         | 2011 |            |  |          | 1 |         |  |            | 0.34 |   |  |  | 1953 |  |  |  | 1953 | 
|Jackson, MS                    |  | WLBT-TV |  |        | 89  |         |  |             | 3  |         |  | NBC        |  |         | 2011 |            |  |          | 1 |         |  |            | 0.30 |   |  |  | 1953 |  |  |  | 2000 | 
|Harlingen, TX                  |  | KGBT-TV |  |        | 97  |         |  |             | 4  |         |  | CBS        |  |         | 2003 |            |  |          | 3 |         |  |            | 0.27 |   |  |  | 1955 |  |  |  | 1998 | 
|Evansville, IN                 |  | WFIE-TV |  |        | 99  |         |  |             | 14 |         |  | NBC        |  |         | 2011 |            |  |          | 1 |         |  |            | 0.26 |   |  |  | 1953 |  |  |  | 1981 | 
|Tyler, TX                      |  | KLTV-TV |  |        | 109 |         |  |             | 7  |         |  | ABC        |  |         | 2002 |            |  |          | 1 |         |  |            | 0.24 |   |  |  | 1954 |  |  |  | 2000 | 
|Lufkin, TX
(satellite of KLTV) |  | KTRE-TV |  |        | 109 |         |  |             | 9  |         |  | ABC        |  |         | 2002 |            |  |          | 1 |         |  |            | 0.24 |   |  |  | 1955 |  |  |  | 2000 | 
|Montgomery, AL                 |  | WSFA-TV |  |        | 116 |         |  |             | 12 |         |  | NBC        |  |         | 2011 |            |  |          | 1 |         |  |            | 0.23 |   |  |  | 1959 |  |  |  | 1959 | 
|Wilmington, NC                 |  | WWAY-TV |  |        | 144 |         |  |             | 3  |         |  | ABC        |  |         | 2005 |            |  |          | 2 |         |  |            | 0.15 |   |  |  | 1964 |  |  |  | 1998 | 
|Lubbock, TX                    |  | KCBD-TV |  |        | 147 |         |  |             | 11 |         |  | NBC        |  |         | 2011 |            |  |          | 1 |         |  |            | 0.14 |   |  |  | 1953 |  |  |  | 2000 | 
|Albany, GA                     |  | WALB-TV |  |        | 148 |         |  |             | 10 |         |  | NBC        |  |         | 2011 |            |  |          | 1 |         |  |            | 0.14 |   |  |  | 1954 |  |  |  | 1998 | 
|Biloxi, MS                     |  | WLOX-TV |  |        | 157 |         |  |             | 13 |         |  | ABC        |  |         | 2004 |            |  |          | 1 |         |  |            | 0.12 |   |  |  | 1962 |  |  |  | 1995 | 
|Lake Charles, LA               |  | KPLC-TV |  |        | 174 |         |  |             | 7  |         |  | NBC        |  |         | 2011 |            |  |          | 1 |         |  |            | 0.09 |   |  |  | 1954 |  |  |  | 1986 | 
|Jonesboro, AR                  |  | KAIT-TV |  |        | 181 |         |  |             | 8  |         |  | ABC        |  |         | 2004 |            |  |          | 1 |         |  |            | 0.08 |   |  |  | 1963 |  |  |  | 1986 | 



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|(1) |  | Market rank is based on the relative size of the designated market areas
among the 212 generally recognized designated market areas in the U.S.                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Contracts may be subject to renewal provisions that effectively extend
the expiration date.                                                                    
|   
|(3) |  | Station rank in its market area based on Nielsen Media Research average 3
book estimates (February, May, and November) 2002 ratings (Sun.  Sat.;
6:00A-2:00A).
|   
|(4) |  | Based on Nielsen Media Research estimates.                                                                                                                     

The Company currently owns and operates fifteen network-affiliated
television stations in the Southeast and Midwest, fourteen 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) 2002 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 3.34% of U.S.
households.

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.

The fifteen stations operate in designated market areas ranked 50 to 181.
None of the TV markets represented more than 12% of the revenues or 11% of
broadcast cash flow for the fiscal year ending December 31, 2002. The Company
believes that it generates one of the best broadcast cash flow per households
covered ratios of any broadcast group in the industry. It also believes that
twelve of the fifteen stations generate substantially greater broadcast cash
flow and earnings than the average station of comparable market size.

The Company also operates a cable advertising company, CableVantage, Inc.
(Cable Vantage), through which it represents nine independent cable operators
in 18 locations that, in combination, reach nearly one half million
subscribers.

3



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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. While
the Company is currently operating under the terms of its existing ABC network
affiliation contacts, it will be negotiating new contracts during 2003. The
Company will also renegotiate its CBS network affiliation contracts during
2003. The company has received no network compensation from CBS during the last
two years. 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 each of the respective networks.

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.

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,
2002:

|                               |  |      |    |      |  |      |    |   |  |  |    |  
|------------------------------ |  | ---- | -- | ---- |  | ---- | -- | - |  |  | -- | -
|                               |  | 2002 |    | 2001 |  | 2000
|                               |  |      |    |      |  |     
|Local and regional advertising |  |      | 55 | %    |  |      | 61 | % |  |  | 56 | %
|National spot advertising      |  |      | 29 |      |  |      | 32 |   |  |  | 29 |  
|Network compensation           |  |      | 2  |      |  |      | 4  |   |  |  | 5  |  
|Political advertising          |  |      | 12 |      |  |      | 1  |   |  |  | 8  |  
|Other                          |  |      | 2  |      |  |      | 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

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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 and
video production. Revenues from these operations amount to $16.2 million,
$13.2 million and $13.9 million for calendar years 2002, 2001, and 2000,
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 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 are beginning to
extend their services to those size markets in which Liberty stations operate.
Liberty anticipates that it will negotiate retransmission consents with both
Echostar and Direct-TV for three to four of its markets during the coming year.
At this time, the Company can not predict what the ultimate outcome of these
negotiations will be, but it is possible that the stations will be able to
negotiate a per subscriber fee for granting the direct broadcast satellite
companies 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.

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Mandated Conversion to Digital Technology

In accordance with Federal Communications Commission (FCC or
Commission) regulations, all station affiliates of ABC, CBS and NBC in the
top ten designated market areas were required to transmit a digital signal by
May 1, 1999. Affiliates of those networks in designated market areas ranked
eleven through thirty were required to transmit a digital signal by November 1,
1999. All commercial broadcasters were required to meet a May 1, 2002
deadline or file for an extension. Such extensions required stations to
document extenuating operating, technical, or financial circumstances which
prohibited them from meeting the May 1, 2002 deadline. The FCC has generally
approved two separate six-month extensions, if appropriately documented,
effectively making May 1, 2003 the final deadline. The FCC has threatened
possible fines for those stations which do not meet the 2003 deadline.

The Company anticipates that eleven of its fifteen stations will meet the
May 2003 deadline. Four stations are currently involved in various FCC
administrative processes (construction permit errors, challenges to requested
channel changes, etc) which will in all likelihood result in those stations not
meeting the May 1, 2003 deadline. While it is possible that the FCC could fine
these stations, the Company believes that the delays were beyond its control
and that it will be able to document those issues to the satisfaction of the
Commission.

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 $24
million in preparation for the transition to digital television, and estimates
that an additional $10 to $15 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 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.

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 licensee;                                   
|
| |  |  | 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

6



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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. To date, the loosening of the ownership provisions,
as well as the other provisions included in the 1996 Act, have not had any
significant direct impact on the Companys operations.

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 35% of all
U.S. households. However, a federal appeals court in February of 2002, in
response to a plaintiff seeking to eliminate or expand the 35% limit, ruled
that the FCC had not adequately justified this policy. The court ordered the
Commission to provide it with such justification or eliminate the 35%
restriction. It is not possible for the Company to predict if the FCC will be
successful in its attempt to justify, or will even attempt to justify, the 35%
policy to the court. In addition, Congress has traditionally favored diversity
of media intent restrictions. It is not possible for the Company to predict
how Congress might act legislatively in response to any FCC action or inaction.

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. The FCC has recently relaxed the duopoly
rule to allow broadcasters to own, under certain circumstances, more than one
television station in the same local area. The same appeals court which ruled
on the 35% ownership limitations, disallowed the current FCC cross-ownership
policy which prohibited a cable operator from owning a television station in
the same market. The newspaper-television cross-ownership prohibition still
stands. However, the FCC has stated its intention to perform a comprehensive
review of the ownership limitation, duopoly and cross-ownership issues, with
any changes to be announced by late spring of 2003. While it is impossible to
project what the Commission might do, it is generally anticipated that the FCC
will relax its ownership rules in some fashion.

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. The FCC is
considering proposals to amend the ownership attribution rules including the
general attributable interest threshold to 10% of the outstanding voting
stock of a broadcast licensee and increasing the threshold for passive
institutional investors to 20%.

The FCC recently relaxed its national television station multiple
ownership rules. 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 35% of
the television homes in the U.S. For this purpose, only 50% of the television
households in a market are counted towards the 35% national restriction if the
owned station is a UHF station. An FCC rulemaking is under way to address how
to measure audience reach, including the UHF discount, as part of the FCCs
biennial review of the broadcast rules mandated by the Telecom Act. The
television homes that the Companys stations reach is well below the 35%
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.

7



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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 more recently been banned by Congress. Certain
Congressional committees have 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 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.

Cable 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 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.

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.

8



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The FCC presently plans for the DTV transition period to end by 2006. At
that time, broadcasters will be required to discontinue analog operations and
to return their present channels to the FCC. However, 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 has recently issued regulations with respect to DTV allocations
and interference criteria which are not yet final, and other aspects of the DTV
regulatory framework have not yet been established. 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 recently 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. The FCC has
also recently initiated a rulemaking proceeding to determine whether and to
what extent cable systems will be required to carry broadcast DTV signals.

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.

Industry Segment Data.Information concerning the Companys industry
segments is contained in the Notes to the Consolidated Financial Statements on
page 33 of this report and is incorporated in this Item 1 by reference.

Employees.At December 31, 2002 the Company had approximately 1,380
employees.

Internet Address.The Company maintains its Internet website at
www.libertycorp.com. The Company makes available free of charge through its
Internet website 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, and any amendments or waivers to its Code of Ethics.

9



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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 2002.

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, 2002, 408 shareholders of
record in 40 states, the District of Columbia, Australia, and Canada held the
19,423,317 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:

|               |  |                        |       |          |  |                        |       |          |  |                        |      |           |  |      |       |     |  |           |       |           |  |   |      |  |  |   |       |  |  |           |       |  |  |   |      | 
|-------------- |  | ---------------------- | ----- | -------- |  | ---------------------- | ----- | -------- |  | ---------------------- | ---- | --------- |  | ---- | ----- | --- |  | --------- | ----- | --------- |  | - | ---- |  |  | - | ----- |  |  | --------- | ----- |  |  | - | ---- | 
|               |  | 2002                   |       | 2001     |  | 2000                  
|               |  |                        |       |          |  |                       
|               |  |                        |       |          |  |                        |       |          |  | 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 |  | $                      | 40.50 |          |  | $                      | 32.10 |          |  | $                      | 0.22 |           |  | $    | 44.25 |     |  | $         | 39.00 |           |  | $ | 0.22 |  |  | $ | 42.50 |  |  | $         | 31.69 |  |  | $ | 0.22 | 
|Third Quarter  |  |                        | 40.08 |          |  |                        | 28.50 |          |  |                        | 0.22 |           |  |      | 42.00 |     |  |           | 38.45 |           |  |   | 0.22 |  |  |   | 42.88 |  |  |           | 34.19 |  |  |   | 0.22 | 
|Second Quarter |  |                        | 45.00 |          |  |                        | 39.00 |          |  |                        | 0.22 |           |  |      | 40.00 |     |  |           | 33.80 |           |  |   | 0.22 |  |  |   | 43.88 |  |  |           | 30.75 |  |  |   | 0.22 | 
|First Quarter  |  |                        | 42.51 |          |  |                        | 39.20 |          |  |                        | 0.22 |           |  |      | 42.32 |     |  |           | 33.25 |           |  |   | 0.22 |  |  |   | 42.19 |  |  |           | 31.25 |  |  |   | 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

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

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

10



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Equity Compensation Plan Information

|                                                           |       |     |                    |           |                    |     |                    |       |                     |  |                     |         | 
|---------------------------------------------------------- | ----- | --- | ------------------ | --------- | ------------------ | --- | ------------------ | ----- | ------------------- |  | ------------------- | ------- | 
|                                                           |       |     |                    |           |                    |     |                    |       |                     |  | Number of          
|                                                           |       |     |                    |           |                    |     |                    |       |                     |  | Securities         
|                                                           |       |     |                    |           |                    |     |                    |       |                     |  | Remaining Available
|                                                           |       |     | Number of          |           |                    |     |                    |       | For Future Issuance
|                                                           |       |     | Securities To Be   |           |                    |     |                    |       | Under Equity       
|                                                           |       |     | Issued Upon        |           | Weighted-Average   |     | Compensation Plans
|                                                           |       |     | Exercise of        |           | Exercise Price of  |     | (Excluding        
|                                                           |       |     | Outstanding        |           | Outstanding        |     | Securities        
|                                                           |       |     | Options, Warrants, |           | Options, Warrants, |     | Reflected in      
|                                                           |       |     | and Rights         |           | and Rights         |     | Column(a))        
|Plan Category                                              |       | (a) |                    | (b)       |                    | (c)
|                                                           |       |     |                    |           |                    |    
|Equity compensation
plans approved by
security holders     |       |     | 1,147,744          |           |                    | $   | 35.07              |       |                     |  | 661,088             |        
|Equity compensation
plans not approved
by security holders |       |     |                   |           |                    |     | N/A                |       |                     |  | N/A                 |        
|                                                           |       |     |                    |           |                    |     |                    |       |                     |  |                     |        
|                                                           | Total |     |                    | 1,147,744 |                    |     | $                  | 35.07 |                     |  |                     | 661,088 | 

11



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Item 6. Selected Financial Data

|                                                         |  |      |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         |  
|-------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | -
|(In $000's, except per
share data)                       |  | 2002 |         | 2001 |  | 2000 |         | 1999 |  | 1998
|                                                         |  |      |         |      |  |      |         |      |  |     
|Net revenues *                                           |  | $    | 206,367 |      |  | $    | 178,285 |      |  | $    | 173,672 |  |  | $ | 154,000 |  |  | $ | 137,626 |  
|Income from continuing operations                        |  | $    | 32,995  |      |  | $    | 16,576  |      |  | $    | 24,995  |  |  | $ | 18,630  |  |  | $ | 21,391  |  
|Income (loss) from discontinued operations**             |  |      |        |      |  |      |        |      |  | $    | 28,563  |  |  | $ | 25,939  |  |  | $ | (3,630  | )
|Cumulative effect of a change in accounting principle*** |  | $    | (47,388 | )    |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        |  
|Net income (loss)                                        |  | $    | (14,393 | )    |  | $    | 16,576  |      |  | $    | 53,558  |  |  | $ | 44,569  |  |  | $ | 17,761  |  
|Income from continuing operations per diluted share      |  | $    | 1.68    |      |  | $    | 0.84    |      |  | $    | 1.27    |  |  | $ | 0.91    |  |  | $ | 0.99    |  
|Dividends Per Common Share                               |  | $    | 0.88    |      |  | $    | 0.88    |      |  | $    | 0.88    |  |  | $ | 0.88    |  |  | $ | 0.86    |  
|Assets                                                   |  | $    | 670,751 |      |  | $    | 730,195 |      |  | $    | 896,007 |  |  | $ | 858,302 |  |  | $ | 894,388 |  
|Notes, Mortgages and Other Debts                         |  |      |        |      |  |      |        |      |  |      |        |  |  | $ | 234,000 |  |  | $ | 285,000 |  
|Redeemable Preferred Stock                               |  |      |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  | $ | 20,967  |  
|Shareholders Equity                                     |  | $    | 538,236 |      |  | $    | 581,671 |      |  | $    | 580,993 |  |  | $ | 554,224 |  |  | $ | 529,507 |  



---

|*   |  | See Note 4 of the Consolidated Financial Statements regarding television
station acquisitions made during 2000                                                                                                                               
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|**  |  | See Note 3 of the Consolidated Financial Statements regarding the sale of
the Companys insurance operations in November of 2000                                                                                                             
|   
|*** |  | See Note 6 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

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, a video production 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.

Prior to September 29, 2000, the Company was also engaged in the insurance
industry. On September 29, 2000, the Companys shareholders approved the sale
of the Companys insurance operations to RBC for $648 million. The sale closed
on November 1, 2000. Accordingly, these entities have been treated as
discontinued operations in the accompanying financial statements (see Note 3 of
the Consolidated Financial Statements).

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.

12



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SIGNIFICANT EVENTS AND TRANSACTIONS

On February 29, 2000, the Company completed the acquisition of KCBD, the
NBC affiliate in Lubbock, TX in a cash transaction for $59.8 million. The
transaction was accounted for as a purchase, and accordingly, its results of
operations are included in the accompanying consolidated financial statements
since the date of acquisition. This purchase was funded using proceeds from
the Companys credit facility.

On June 19, 2000, the Company entered into a purchase agreement with RBC,
a Canadian-chartered bank, pursuant to which RBC was to acquire from the
Company all of the issued and outstanding shares of capital stock of the
companies comprising its insurance operations, for a total of approximately
$648 million, consisting of a dividend from Liberty Life Insurance Company of
up to $70 million and the balance in cash from RBC. On September 29, 2000, the
Companys shareholders approved the purchase agreement, and on November 1, 2000
the Company completed the sale to RBC. Accordingly, these entities have been
treated as discontinued operations in the accompanying financial statements
(see Note 3 of the Consolidated Financial Statements).

On August 25, 2000, the Company completed the redemption of all of the
outstanding shares of its Series 1995-A Cumulative Convertible Preferred Stock.
Shares were called for redemption at $35.00 per share plus accrued dividends
for the period from July 1, 2000 through the Series 1995-A redemption date
(September 5, 2000). Prior to the redemption date, all shares of the 1995-A
Series were converted into common stock.

On November 1, 2000, using proceeds from the sale of its insurance
operations, the Company repaid its revolving credit facility in full.

On December 1, 2000, the Company completed its acquisition of Civic. The
agreed upon purchase price for all of the outstanding common stock of Civic was
$204 million. The Company used proceeds from the sale of its insurance
operations to fund the transaction. Civic owned and operated WLBT-TV, the NBC
affiliate in Jackson, MS, KLTV-TV, the ABC affiliate in Tyler, TX, and KTRE-TV,
the satellite affiliate of KLTV in Lufkin, TX.

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.

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 receivables off against its allowance
for doubtful accounts when it deems them to be uncollectible on a specific
identification basis.

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. Advertising revenue for
specific program contracts may not continue to equal or exceed the amortization
being taken and additional adjustments may be necessary in the future.

FCC licenses and network affiliations 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 requires
management to make certain estimates and assumptions to determine the estimated
fair value of its individual stations and
its station group as a whole. These 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, and assumed

13



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future capital expenditure levels.
Actual results and future market conditions could differ from those estimates
and assumptions used.

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 also include revenues from network
affiliation contracts. Revenues from network affiliation contracts are recorded
as earned over the life of the contract. Cash payments received in excess of
revenue earned to date are recorded as unearned revenue.

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.

Realized investment gains and losses are recognized using the specific
identification method to determine the cost of investments sold. 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 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 significantly
impact our judgments and require further adjustments to these balances. The
Company reviews its investments for impairment on a quarterly basis.

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. Deferred tax assets are subject to
periodic recoverability assessments. Realization of our deferred tax assets is
principally dependent upon our achievement of projected future taxable income.
Our judgments regarding future profitability may change due to future market
conditions, among other factors. These changes, if any, may require possible
material adjustments to these deferred tax asset balances.

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.

14



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SUMMARY OF CONSOLIDATED RESULTS

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                    |  |      | 5,955   |      |  |        | 3,000   |   |  |   | 2,955  |  
|                                      |  |      |         |      |  |        |         |   |  |   |        |  
|Gross station revenues                |  |      | 224,294 |      |  |        | 192,361 |   |  |   | 31,933 |  
|Agency commissions                    |  |      | (34,147 | )    |  |        | (27,322 | ) |  |   | (6,825 | )
|                                      |  |      |         |      |  |        |         |   |  |   |        |  
|Station revenues (net of commissions) |  |      | 190,147 |      |  |        | 165,039 |   |  |   | 25,108 |  
|Cable and other (net of commissions)  |  |      | 16,220  |      |  |        | 13,246  |   |  |   | 2,974  |  
|                                      |  |      |         |      |  |        |         |   |  |   |        |  
|Net revenues                          |  | $    | 206,367 |      |  | $      | 178,285 |   |  | $ | 28,082 |  
|                                      |  |      |         |      |  |        |         |   |  |   |        |  

Net revenues were $206.4 million for the year ended December 31, 2002, an
increase of $28.1 million over the $178.3 million reported for 2001. Net
station revenues were $190.1 million for 2002, an increase of $25.1 million
over the $165.0 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
$122.9 million for the year ended December 31, 2002, an increase of $11.1
million over the $111.8 million reported for 2001. The broadcasting segments
operating expenses were $109.4 million for 2002, an increase of $8.6 million
over the $100.8 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 annual salary increases across the Company. Cable operating
expenses were $12.9 million for 2002, an increase of $2.8 million over the
$10.1 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 review for impairment.
Had SFAS No. 142 been effective as of the beginning of the

15



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##### 



first quarter of
2001, reported depreciation and amortization expenses would have been
approximately $16.9 million. (See Note 6 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.

The Year 2001 Compared With 2000

(In $000s)

|                                      |  |      |         |      |  |        |         |   |  |   |         |  
|------------------------------------- |  | ---- | ------- | ---- |  | ------ | ------- | - |  | - | ------- | -
|                                      |  | 2001 |         | 2000 |  | Change
|                                      |  |      |         |      |  |       
|National                              |  | $    | 61,476  |      |  | $      | 53,725  |   |  | $ | 7,751   |  
|Local and regional                    |  |      | 118,034 |      |  |        | 105,514 |   |  |   | 12,520  |  
|Political                             |  |      | 1,957   |      |  |        | 14,242  |   |  |   | (12,285 | )
|Network                               |  |      | 7,894   |      |  |        | 10,742  |   |  |   | (2,848  | )
|Other broadcasting                    |  |      | 3,000   |      |  |        | 2,164   |   |  |   | 836     |  
|                                      |  |      |         |      |  |        |         |   |  |   |         |  
|Gross station revenues                |  |      | 192,361 |      |  |        | 186,387 |   |  |   | 5,974   |  
|Agency commissions                    |  |      | (27,322 | )    |  |        | (26,565 | ) |  |   | (757    | )
|                                      |  |      |         |      |  |        |         |   |  |   |         |  
|Station revenues (net of commissions) |  |      | 165,039 |      |  |        | 159,822 |   |  |   | 5,217   |  
|Cable and other (net of commissions)  |  |      | 13,246  |      |  |        | 13,850  |   |  |   | (604    | )
|                                      |  |      |         |      |  |        |         |   |  |   |         |  
|Net revenues                          |  | $    | 178,285 |      |  | $      | 173,672 |   |  | $ | 4,613   |  
|                                      |  |      |         |      |  |        |         |   |  |   |         |  

Net revenues were $178.3 million for the year ended December 31, 2001, an
increase of $4.6 million over the $173.7 million reported for 2000. Net
station revenues were $165.0 million for 2001, an increase of $5.2 million over
the $159.8 million reported for 2000. The acquisitions of KCBD in February
2000, and WLBT, KLTV, and KTRE in December 2000, accounted for $29.6 million of
the revenue in 2001. On a pro forma basis, as if the Company held all of its
current stations for the full year of 2000, net station revenue decreased 13
percent. National revenue increased $7.8 million, due mainly to the four
station acquisitions completed during 2000. On a pro forma basis, national
revenue was down three percent. Local and regional revenue increased $12.5
million, mainly due to the four stations acquired during 2000. On a pro forma
basis, local and regional revenue was down seven percent. The decreases in
national and local and regional revenue on a pro forma basis were due to the
general weakness in the advertising industry during 2001. This general
weakness was exacerbated by the events of September 11th, as a number of
advertisers cancelled or reduced schedules at that time. Political revenue was
$2.0 million in 2001, down $12.3 million from the prior year level as 2001 was
an off year in the biannual political cycle.

Cable and other revenues were $13.2 million for the year ended December
31, 2001, a decrease of $0.6 million from the prior year level.

Operating expenses (including the amortization of program rights) were
$111.8 million for the year ended December 31, 2001, an increase of $10.4
million over the $101.4 million reported for 2000. The broadcasting segments
operating expenses were $100.8 million for 2001, an increase of $13.8 million
over the $87.0 million reported for 2000. On a pro forma basis, broadcast
operating expenses decreased five percent. This decrease is due to lower levels
of commission paid to local sales personnel as a result of a lower revenue base
in 2001, reductions in promotional expenses, and a reduction in

16



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##### 



personnel
implemented during 2001. Cable operating expenses were $10.1 million for 2001,
an increase of $0.5 million over the $9.6 million reported for 2000. The
increase in cable advertising operating expenses is attributable mainly to its
expansion to new locations. Operating expenses associated with the Companys
other operations were approximately $0.9 million in 2001 and $4.8 million in
2000. Of the amount in 2000, $4.4 million relates to the phase-out and wind up
of the Companys direct mail coupon business.

Depreciation and amortization was $32.0 million for the year ended
December 31, 2001, an increase of $10.9 million over the $21.1 million reported
for 2000. The increase in depreciation and amortization expense is
attributable to the four station acquisitions completed during 2000.

Corporate, general, and administrative expenses were $11.8 million for the
year ended December 31, 2001, a decrease of $0.4 million over the $12.2 million
reported for 2000. The decrease in corporate, general, and administrative
expenses is due to lower levels of corporate charitable contributions and
consulting fees, offset by certain costs associated with the relocation of the
Companys headquarters, and the non-capitalizable portion of expenses related
to the implementation of new accounting and payroll systems.

Net investment income reported for the year ended December 31, 2001 was
$4.1 million, a decrease of $12.6 million from the $16.7 million reported for
2000. The decrease was due mainly to realized gains in the Companys
investment portfolio in 2000, and additional interest income earned on the
residual insurance sale proceeds that were not present during 2001. Also,
during the third quarter of 2001 the Company recognized a $3.2 million charge
related to the determination that certain of its venture capital investments
had carrying values in excess of their fair values, and that certain of those
excesses were other than temporary.

No interest expense was reported for the year ended December 31, 2001 as
the Company paid off its credit facility during 2000 with proceeds from the
sale of its insurance operations. Interest expense of $14.4 million was
reported for the year ended December 31, 2000.

The effective tax rate was 38.0% and 39.4% for 2001 and 2000,
respectively.

BROADCAST CASH FLOW INFORMATION

|                                                       |  |      |        |      |  |      |        |  |  |   |        | 
|------------------------------------------------------ |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|(In $000's)                                            |  | 2002 |        | 2001 |  | 2000
|Operating income                                       |  | $    | 52,175 |      |  | $    | 22,650 |  |  | $ | 38,921 | 
|One time charges (1)                                   |  |      |       |      |  |      |       |  |  |   | 3,198  | 
|                                                       |  |      |        |      |  |      |        |  |  |   |        | 
|Adjusted operating income                              |  |      | 52,175 |      |  |      | 22,650 |  |  |   | 42,119 | 
|Add:                                                   |  |      |        |      |  |      |        |  |  |   |        | 
|Depreciation and amortization                          |  |      | 17,762 |      |  |      | 31,970 |  |  |   | 21,097 | 
|Adjustment for network compensation due versus accrued |  |      | 4,932  |      |  |      | 673    |  |  |   |       | 
|Non-cash compensation                                  |  |      | 2,501  |      |  |      | 2,122  |  |  |   | 1,211  | 
|                                                       |  |      |        |      |  |      |        |  |  |   |        | 
|Operating cash flow                                    |  |      | 77,370 |      |  |      | 57,415 |  |  |   | 64,427 | 
|Corporate cash expenses                                |  |      | 12,391 |      |  |      | 10,954 |  |  |   | 11,028 | 
|                                                       |  |      |        |      |  |      |        |  |  |   |        | 
|Broadcast cash flow                                    |  | $    | 89,761 |      |  | $    | 68,369 |  |  | $ | 75,455 | 
|                                                       |  |      |        |      |  |      |        |  |  |   |        | 



---

|(1) |  | Adjustment to exclude the net impact in 2000 related
to the phase-out and winding up of the Companys direct mail
coupon operations
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------

Additional measures of broadcasting performance are based on cash flow.
Broadcast cash flow information is included because such data is commonly used
as a performance measure for broadcasting companies by investors for, among
other items, measuring a companys debt, and debt service capacity.

Broadcast cash flow for 2002 was $89.8 million, an increase of $21.4
million as compared to the $68.4 million reported for 2001. The increase in
broadcast cash flow is due mainly to the increase in revenues as a result of
robust spending by political advertisers during 2002.

17



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##### 



This cash flow information is not, and should not be used as, an
alternative or substitute for the net income or cash flows included in the
Companys Consolidated Financial Statements, and is not a measure of financial
performance under generally accepted accounting principles. As the
calculation of broadcast cash flow is before corporate expenses, interest
expense, and income taxes, it is not necessarily indicative of the funds that
are available for managements discretionary use.

INVESTMENTS

During the year ended December 31, 2002, the Company had net investment
income of $0.6 million. The majority of this was related to gains on the sale
of marketable equity securities and interest income earned on cash balances.
At December 31, 2002, other long-term investments, included in the caption
investments and other assets on the balance sheet, was comprised of
approximately 24% private equity securities, 26% private debt securities, 14%
real estate related investments, 16% venture capital limited partnerships, and
20% 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 7 and 15 to the Consolidated Financial
Statements.

LIQUIDITY AND CAPITAL RESOURCES

The Companys short-term cash needs consist primarily of working capital
requirements, and dividends to shareholders. Historically, Libertys operations
have provided sufficient liquidity for the operations of the Company.

The Companys primary long-term cash needs are the possible need for
capital should the Company identify an appropriate acquisition opportunity, and
the expenditures associated with implementing high definition television
broadcast operations. While exact costs are not presently known, the
additional capital expenditures required over the next several years to comply
with the FCC high definition television implementation deadline are anticipated
to be approximately $10 million to $15 million.

On a consolidated basis, Libertys net cash provided by operating
activities was $91.8 million for 2002 compared with cash used in operating
activities of $75.5 million for 2001 and cash provided by operating activities
of $28.8 million for 2000. The increase in cash provided by operating
activities is due to the payment in 2001 of approximately $132 million of
income taxes related to the sale of its insurance operations. Excluding the
impact of the Companys discontinued insurance operations and the income taxes
paid related to that sale, net cash provided by operations was $56.5 million in
2001 and $43.3 million for 2000.The increase in cash provided by operating
activities in 2002 as compared to the adjusted 2001 cash provided by operating
activities is due to mainly to the increase in revenues during 2002.

Libertys net cash used in investing activities was $27.7 million in 2002
compared to $20.8 million in 2001 and net cash provided by investing activities
of $359.3 million in 2000. The increase in net cash used in investing
activities in 2002 was due to increased capital expenditures related to the
Companys conversion to digital television broadcasting. The majority of the
net cash provided by investing activities during 2000 was related to the sale
of the Companys insurance operations.

Cash flow used in financing activities for 2002 was $31.6 million versus
$17.2 million and $251 million in 2001 and 2000, respectively. Cash flow used
in financing activities was higher in 2002 as compared to 2001 due to the
increased activity in the Companys share buy-back program during 2002. During
2000, funds from the sale of the Companys insurance operations were used to
pay off the then outstanding balance on its revolving credit facility.

During 2002, the Company repurchased 404,400 shares of its common stock
for approximately $15.3 million. During 2001, the Company repurchased 240,000
shares of its common stock for approximately $9.6 million. During 2000, the
Company repurchased 683,500 shares of its common stock for approximately $24.6
million.

On February 4, 2003, the Board of Directors of the Company extended to
February 28, 2004, the Companys authorization to purchase from time to time up
to 4 million shares of stock in the open market or directly negotiated
transactions.

18



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##### 



In February 2000, the Company used $59.8 million from borrowings under its
credit facility to acquire KCBD, the NBC affiliate in Lubbock, Texas. On
November 1, 2000, the Company repaid this facility in full with a portion of
the proceeds from the sale of its insurance operations.

On August 25, 2000, the Company completed the redemption of all of the
outstanding shares of its Series 1995-A Cumulative Convertible Preferred Stock.
Shares were called for redemption at $35.00 per share plus accrued dividends
for the period from July 1, 2000 through the Series 1995-A redemption date
(September 5, 2000). Prior to the redemption date, all shares of the 1995-A
Series were converted into common stock.

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.

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 $1.2 million
over the next one to three years. The Company also anticipates the funding of
its private debt and equity holdings of approximately $4.0 million during 2003.

At December 31, 2002 and 2001, 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, 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.

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 18 to the Consolidated
Financial Statements. Further discussion of investments and valuation is
contained in Notes 2 and 15 to the Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2002 the Company had no off-balance sheet arrangements.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

|                                                                                  |       |       |                        |        |  |       |       |       |  |       |       |        |  |   |     |     |      |   |       |       | 
|--------------------------------------------------------------------------------- | ----- | ----- | ---------------------- | ------ |  | ----- | ----- | ----- |  | ----- | ----- | ------ |  | - | --- | --- | ---- | - | ----- | ----- | 
|                                                                                  |       |       | Payments Due By Period
|                                                                                  |       |       |                       
|                                                                                  |       |       |                        |        |  |       | Less  |       |  |       |       |        |  |   |     |     | More
|Contractual Obligations                                                           |       |       |                        |        |  | Than  |       | 1-3   |  | 3-5   |       | Than 5
|(In $000's)                                                                       |       | Total |                        | 1 Year |  | Years |       | Years |  | Years
|                                                                                  |       |       |                        |        |  |       |       |       |  |      
|Long-Term Debt                                                                    |       | $     |                       |        |  | $     |      |       |  | $     |      |        |  | $ |    |     |      | $ |      |      
|Capital Lease Obligations                                                         |       |       |                       |        |  |       |      |       |  |       |      |        |  |   |    |     |      |   |      |      
|Operating Lease Obligations                                                       |       |       | 1,636                  |        |  |       | 579   |       |  |       | 693   |        |  |   | 356 |     |      |   | 8     |      
|Purchase Obligations                                                              |       |       | 2,478                  |        |  |       | 1,278 |       |  |       | 1,200 |        |  |   |    |     |      |   |      |      
|Other Long-Term
Liabilities Reflected on
the Registrants Balance Sheet Under GAAP |       |       | 6,312                  |        |  |       | 261   |       |  |       | 144   |        |  |   | 144 |     |      |   | 5,763 |      
|                                                                                  |       |       |                        |        |  |       |       |       |  |       |       |        |  |   |     |     |      |   |       |      
|                                                                                  | Total |       | $                      | 10,426 |  |       | $     | 2,118 |  |       | $     | 2,037  |  |   | $   | 500 |      |   | $     | 5,771 | 
|                                                                                  |       |       |                        |        |  |       |       |       |  |       |       |        |  |   |     |     |      |   |       |      

19



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##### 



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, 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. At December 31, 2001,
the Company had $7.7 million of investments in marketable equity securities.
The majority of the portfolio at that time was invested in a bond fund with a
Aaa bond fund credit rating and an MR1 market risk rating from Moodys
Investors Service. Bond funds rated MR1 are judged by Moodys to have very low
sensitivity to changing interest rates and other market conditions, and as such
tend to mitigate the interest risk inherent in debt securities.

As of December 31, 2002 and 2001, real estate related investments totaled
$6.3 million and $13.4 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 7
and 15 to the Consolidated Financial Statements.

20



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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,
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                   
|                                                                                                                                                  |                                                                                                          |                            |                                            |          | 2002               |         | 2001   
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |        
|ASSETS                                                                                                                                            |                                                                                                          |                            |                                            |          |                    |         |         |         
|Current assets:                                                                                                                                   |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  | Cash and cash equivalents                                                                                |                            | $                                          | 67,917   |                    |         | $       | 35,489   |        
|                                                                                                                                                  | Receivables (net of allowance for doubtful
accounts of $1,963 and $2,250 in 2002 and
2001, respectively) |                            |                                            | 42,069   |                    |         |         | 40,035   |        
|                                                                                                                                                  | Program rights                                                                                           |                            |                                            | 4,433    |                    |         |         | 4,678    |        
|                                                                                                                                                  | Prepaid and other current assets                                                                         |                            |                                            | 2,982    |                    |         |         | 4,638    |        
|                                                                                                                                                  | Income taxes receivable                                                                                  |                            |                                            | 2,370    |                    |         |         | 6,719    |        
|                                                                                                                                                  | Deferred income taxes                                                                                    |                            |                                            | 5,508    |                    |         |         | 13,129   |        
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  |                                                                                                          |                            | Total current assets                       |          |                    | 125,279 |         |          |         | 104,688 | 
|Property, plant, and equipment:                                                                                                                   |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  | Land                                                                                                     |                            |                                            | 5,639    |                    |         |         | 5,639    |        
|                                                                                                                                                  | Buildings and improvements                                                                               |                            |                                            | 52,638   |                    |         |         | 37,819   |        
|                                                                                                                                                  | Furniture and equipment                                                                                  |                            |                                            | 157,401  |                    |         |         | 153,092  |        
|                                                                                                                                                  | Less: Accumulated depreciation                                                                           |                            |                                            | (120,409 | )                  |         |         | (108,241 | )      
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  |                                                                                                          |                            | 95,269                                     |          |                    |         | 88,309  |         
|Intangible assets subject to amortization (net
of $751 and $6,018 accumulated amortization in
2002 and 2001, respectively)                        |                                                                                                          |                            | 369                                        |          |                    |         | 903     |         
|FCC licenses and network affiliations                                                                                                             |                                                                                                          |                            | 304,285                                    |          |                    |         | 380,718 |         
|Goodwill                                                                                                                                          |                                                                                                          |                            | 101,387                                    |          |                    |         | 101,387 |         
|Investments and other assets                                                                                                                      |                                                                                                          |                            | 44,162                                     |          |                    |         | 54,190  |         
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          |                            | Total assets                               |          | $                  | 670,751 |         |          | $       | 730,195 | 
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |         
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                              |                                                                                                          |                            |                                            |          |                    |         |         |         
|Current liabilities:                                                                                                                              |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  | Accounts payable and accrued expenses                                                                    |                            | $                                          | 24,433   |                    |         | $       | 19,676   |        
|                                                                                                                                                  | Program contract obligations                                                                             |                            |                                            | 4,486    |                    |         |         | 4,949    |        
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  |                                                                                                          |                            | Total current liabilities                  |          |                    | 28,919  |         |          |         | 24,625  | 
|Unearned revenue                                                                                                                                  |                                                                                                          |                            | 5,637                                      |          |                    |         | 881     |         
|Deferred income taxes                                                                                                                             |                                                                                                          |                            | 91,647                                     |          |                    |         | 116,413 |         
|Other liabilities                                                                                                                                 |                                                                                                          |                            | 6,312                                      |          |                    |         | 6,605   |         
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          |                            | Total liabilities                          |          |                    | 132,515 |         |          |         | 148,524 | 
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |         
|Shareholders equity:                                                                                                                             |                                                                                                          |                            |                                            |          |                    |         |         |         
|Common stock (authorized  50,000,000 shares,
no par value, shares issued and outstanding 
19,423,317 shares in 2002, 19,749,632 shares in 2001) |                                                                                                          |                            | 92,978                                     |          |                    |         | 104,865 |         
|Unearned stock compensation                                                                                                                       |                                                                                                          |                            | (3,802                                     | )        |                    |         | (3,687  | )       
|Retained earnings                                                                                                                                 |                                                                                                          |                            | 448,887                                    |          |                    |         | 480,556 |         
|Unrealized investment gains (losses)                                                                                                              |                                                                                                          |                            | 173                                        |          |                    |         | (63     | )       
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |         
|                                                                                                                                                  |                                                                                                          | Total shareholders equity |                                            |          | 538,236            |         |         |          | 581,671 |        
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |          |        
|                                                                                                                                                  |                                                                                                          |                            | Total liabilities and shareholders equity |          | $                  | 670,751 |         |          | $       | 730,195 | 
|                                                                                                                                                  |                                                                                                          |                            |                                            |          |                    |         |         |         

See Notes to Consolidated Financial Statements.

21



---



##### 



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

|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |         |        |        |        | 
|------------------------------------------------------------------------ | ------------------------ | ----------------------------------------------------- | -------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------ | -------------------------------- | ------- | ------- | ------ | ---- | ------- | ------- | ------ | ------ | ------ | 
|                                                                         |                          |                                                       |                                                                                        |                                                                |        | For the Years Ended December 31,
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                 
|                                                                         |                          |                                                       |                                                                                        |                                                                |        | 2002                             |         | 2001    |        | 2000
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |     
|REVENUES                                                                 |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|Station revenues (net of commissions)                                    |                          | $                                                     | 190,147                                                                                |                                                                |        | $                                | 165,039 |         |        | $    | 159,822 |        
|Cable advertising (net of commissions) and other revenues                |                          |                                                       | 16,220                                                                                 |                                                                |        |                                  | 13,246  |         |        |      | 13,850  |        
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|                                                                         | Net revenues             |                                                       |                                                                                        | 206,367                                                        |        |                                  |         | 178,285 |        |      |         | 173,672 |       
|EXPENSES
Operating expenses                                              |                          |                                                       | 115,668                                                                                |                                                                |        |                                  | 103,908 |         |        |      | 95,564  |        
|Amortization of program rights                                           |                          |                                                       | 7,281                                                                                  |                                                                |        |                                  | 7,937   |         |        |      | 5,852   |        
|Depreciation and amortization of intangibles                             |                          |                                                       | 17,762                                                                                 |                                                                |        |                                  | 31,970  |         |        |      | 21,097  |        
|Corporate, general, and administrative expenses                          |                          |                                                       | 13,481                                                                                 |                                                                |        |                                  | 11,820  |         |        |      | 12,238  |        
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|                                                                         | Total operating expenses |                                                       |                                                                                        | 154,192                                                        |        |                                  |         | 155,635 |        |      |         | 134,751 |       
|                                                                         |                          |                                                       |                                                                                        | Operating income                                               |        |                                  | 52,175  |         |        |      | 22,650  |         |        |        | 38,921 | 
|Net investment income                                                    |                          |                                                       | 616                                                                                    |                                                                |        |                                  | 4,086   |         |        |      | 16,696  |        
|Interest expense                                                         |                          |                                                       |                                                                                       |                                                                |        |                                  |        |         |        |      | 14,366  |        
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|                                                                         |                          | Income from continuing operations before income taxes |                                                                                        |                                                                | 52,791 |                                  |         |         | 26,736 |      |         |         | 41,251 |       
|Provision for income taxes                                               |                          |                                                       | 19,796                                                                                 |                                                                |        |                                  | 10,160  |         |        |      | 16,256  |        
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|                                                                         |                          | Income from continuing operations                     |                                                                                        |                                                                | 32,995 |                                  |         |         | 16,576 |      |         |         | 24,995 |       
|INCOME
FROM DISCONTINUED OPERATIONS                                      |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |         |       
|Income from operations of discontinued operations, net of income taxes   |                          |                                                       |                                                                                       |                                                                |        |                                  |        |         |        |      | 26,061  |        
|Gain on sale of discontinued operations, net of $131,670 of income taxes |                          |                                                       |                                                                                       |                                                                |        |                                  |        |         |        |      | 2,502   |        
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|                                                                         |                          |                                                       | Income from discontinued operations                                                    |                                                                |        |                                 |         |         |        |     |         |         |        | 28,563 |       
|INCOME BEFORE THE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE  |                          |                                                       | 32,995                                                                                 |                                                                |        |                                  | 16,576  |         |        |      | 53,558  |        
|                                                                         |                          |                                                       | Cumulative effect of a change in accounting principle (net of
$29,045 of income taxes) |                                                                |        | (47,388                          | )       |         |        |     |         |         |        |       |       
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|NET INCOME (LOSS)                                                        |                          | $                                                     | (14,393                                                                                | )                                                              |        | $                                | 16,576  |         |        | $    | 53,558  |        
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|BASIC EARNINGS PER COMMON SHARE:                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|                                                                         |                          |                                                       |                                                                                        | From continuing operations                                     |        | $                                | 1.68    |         |        | $    | 0.85    |         |        | $      | 1.27   | 
|                                                                         |                          |                                                       |                                                                                        | From discontinued operations                                   |        |                                  |        |         |        |      |        |         |        |        | 1.47   | 
|                                                                         |                          |                                                       |                                                                                        | From the cumulative effect of a change in accounting principle |        |                                  | (2.41   | )       |        |      |        |         |        |        |       | 
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|                                                                         |                          | Basic earnings (loss) per common share                |                                                                                        | $                                                              | (0.73  | )                                |         | $       | 0.85   |      |         | $       | 2.74   |       
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|DILUTED EARNINGS PER COMMON SHARE                                        |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|                                                                         |                          |                                                       |                                                                                        | From continuing operations                                     |        | $                                | 1.68    |         |        | $    | 0.84    |         |        | $      | 1.27   | 
|                                                                         |                          |                                                       |                                                                                        | From discontinued operations                                   |        |                                  |        |         |        |      |        |         |        |        | 1.45   | 
|                                                                         |                          |                                                       |                                                                                        | From the cumulative effect of a change in accounting principle |        |                                  | (2.41   | )       |        |      |        |         |        |        |       | 
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        
|                                                                         |                          | Diluted earnings (loss) per common share              |                                                                                        | $                                                              | (0.73  | )                                |         | $       | 0.84   |      |         | $       | 2.72   |       
|                                                                         |                          |                                                       |                                                                                        |                                                                |        |                                  |         |         |        |      |         |        

See Notes to Consolidated Financial Statements.

22



---



##### 



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

|                                                                                  |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   |            |   |  |   |         |   |  |   |         |   | 
|--------------------------------------------------------------------------------- |  |  | ----------- | - | ------ | - | --------- | - | ------------ | - | -------- | - | ---------- | - | -------- | - |  | - | ---------- | - |  | - | ------- | - |  | - | ------- | - | 
|                                                                                  |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   | Unrealized |   |  |   |         |   |  |   |        
|                                                                                  |  |  | Common      |   |        |   |           |   | Convertible  |   | Unearned |   | Investment |   |          |   |  |   |            |   | 
|                                                                                  |  |  | Shares      |   | Common |   | Preferred |   | Stock        |   | Gains    |   | Retained   |   |          |   | 
|                                                                                  |  |  | Outstanding |   | Stock  |   | Stock     |   | Compensation |   | (Losses) |   | Earnings   |   | Total(1)
|                                                                                  |  |  |             |   |        |   |           |   |              |   |          |   |            |   |         
|Balance at January 1, 2000                                                        |  |  | 19,508      |   |        | $ | 100,112   |   |              | $ | 15,031   |   |            | $ | (5,057   | ) |  | $ | (1,191     | ) |  | $ | 445,329 |   |  | $ | 554,224 |  
|Net income                                                                        |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   |            |   |  |   | 53,558  |   |  |   | 53,558  |  
|Net unrealized investment gains, net of
taxes                                     |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   | 1,881      |   |  |   |         |   |  |   | 1,881   |  
|Dividends  Common Stock  $0.88 per share                                        |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   |            |   |  |   | (17,252 | ) |  |   | (17,252 | )
|Dividends  Convertible Preferred Stock 
$1.75 per share                         |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   |            |   |  |   | (365    | ) |  |   | (365    | )
|Stock issued for employee benefit and
performance incentive compensation
programs |  |  | 285         |   |        |   | 8,376     |   |              |   |          |   |            |   | 5,057    |   |  |   |            |   |  |   |         |   |  |   | 13,433  |  
|Income tax benefit resulting from employee
exercise of options                    |  |  |             |   |        |   | 133       |   |              |   |          |   |            |   |          |   |  |   |            |   |  |   |         |   |  |   | 133     |  
|Stock issued for conversion of convertible
preferred stock                        |  |  | 429         |   |        |   | 15,031    |   |              |   | (15,031  | ) |            |   |          |   |  |   |            |   |  |   |         |   |  |   |        |  
|Stock repurchased                                                                 |  |  | (684        | ) |        |   | (24,619   | ) |              |   |          |   |            |   |          |   |  |   |            |   |  |   |         |   |  |   | (24,619 | )
|                                                                                  |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   |            |   |  |   |         |   |  |   |         |  
|Balance at December 31, 2000                                                      |  |  | 19,538      |   |        |   | 99,033    |   |              |   |         |   |            |   |         |   |  |   | 690        |   |  |   | 481,270 |   |  |   | 580,993 |  
|                                                                                  |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   |            |   |  |   |         |   |  |   |         |  
|Net income                                                                        |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   |            |   |  |   | 16,576  |   |  |   | 16,576  |  
|Net unrealized investment 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, 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 |  
|                                                                                  |  |  |             |   |        |   |           |   |              |   |          |   |            |   |          |   |  |   |            |   |  |   |         |   |  |   |         |  



---

|(1) |  | Comprehensive income (loss), which includes the aggregate of net income (loss) and net unrealized investment gains (losses), was $(14,157), $15,823, and $55,439, for 2002, 2001, and 2000, respectively.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.

23



---



##### 



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

|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |         |        | 
|------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------- | ----------------------------------------------------- | ------- | -------------------------------- | ------ | ---- | -------- | -------- | ------ | - | ---------- | ------- | ------ | 
|                                                                                                                   |                                                                  |                                                       |         | For the Years Ended December 31,
|                                                                                                                   |                                                                  |                                                       |         |                                 
|                                                                                                                   |                                                                  |                                                       |         | 2002                             |        | 2001 |          | 2000    
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |         
|OPERATING ACTIVITIES                                                                                               |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|Net income (loss)                                                                                                  |                                                                  | $                                                     | (14,393 | )                                |        | $    | 16,576   |          |        | $ | 53,558     |        
|Less: Income from discontinued operations                                                                          |                                                                  |                                                       |        |                                  |        |      |         |          |        |   | (28,563    | )      
|                                                                                                                   |                                                                  | Cumulative effect of a change in accounting principle |         |                                  | 47,388 |      |          |          |       |   |            |         |       | 
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|                                                                                                                   |                                                                  | Income from continuing operations                     |         |                                  | 32,995 |      |          |          | 16,576 |   |            |         | 24,995 | 
|Adjustments to reconcile income from continuing operations to net cash
provided by (used in) operating activities: |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|                                                                                                                   | Gain on sale of operating assets                                 |                                                       |         | 296                              |        |      |          | 147      |        |   |            | 456     |       
|                                                                                                                   | Realized investment (gains) losses                               |                                                       |         | 3,544                            |        |      |          | 2,211    |        |   |            | (9,981  | )     
|                                                                                                                   | Depreciation                                                     |                                                       |         | 17,063                           |        |      |          | 16,049   |        |   |            | 13,807  |       
|                                                                                                                   | Amortization of intangibles                                      |                                                       |         | 699                              |        |      |          | 15,921   |        |   |            | 7,290   |       
|                                                                                                                   | Amortization of program rights                                   |                                                       |         | 7,281                            |        |      |          | 7,937    |        |   |            | 5,852   |       
|                                                                                                                   | Cash paid for program rights                                     |                                                       |         | (7,499                           | )      |      |          | (7,873   | )      |   |            | (6,362  | )     
|                                                                                                                   | Provision for deferred income taxes                              |                                                       |         | 11,900                           |        |      |          | 9,497    |        |   |            | 737     |       
|Changes in operating assets and liabilities, net of effects of acquisitions:                                       |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|                                                                                                                   | Receivables                                                      |                                                       |         | (2,034                           | )      |      |          | 526      |        |   |            | (2,321  | )     
|                                                                                                                   | Other assets                                                     |                                                       |         | 17,638                           |        |      |          | 42,865   |        |   |            | 9,429   |       
|                                                                                                                   | Accounts payable and accrued expenses                            |                                                       |         | 4,757                            |        |      |          | (52,479  | )      |   |            | 5,825   |       
|                                                                                                                   | Accrued income taxes                                             |                                                       |         |                                 |        |      |          | (128,254 | )      |   |            | 6,690   |       
|                                                                                                                   | Unearned revenue                                                 |                                                       |         | 4,756                            |        |      |          | 881      |        |   |            |        |       
|                                                                                                                   | Other liabilities                                                |                                                       |         | (293                             | )      |      |          | (245     | )      |   |            | (12,607 | )     
|                                                                                                                   | All other operating activities, net                              |                                                       |         | 695                              |        |      |          | 743      |        |   |            | (515    | )     
|                                                                                                                   | Net cash used in operating activities of discontinued operations |                                                       |         |                                 |        |      |          |         |        |   |            | (14,516 | )     
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                                                |                                                                  |                                                       | 91,798  |                                  |        |      | (75,498  | )        |        |   | 28,779     |        
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|INVESTING ACTIVITIES                                                                                               |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|Purchase of property, plant, and equipment                                                                         |                                                                  |                                                       | (24,704 | )                                |        |      | (13,853  | )        |        |   | (9,691     | )      
|Proceeds from sale of property, plant, and equipment                                                               |                                                                  |                                                       | 385     |                                  |        |      | 750      |          |        |   | 84         |        
|Net cash paid for purchase of television stations                                                                  |                                                                  |                                                       |        |                                  |        |      |         |          |        |   | (231,312   | )      
|Funding of trust for unremitted television station purchase price                                                  |                                                                  |                                                       |        |                                  |        |      |         |          |        |   | (43,168    | )      
|Investment securities sold                                                                                         |                                                                  |                                                       | 8,083   |                                  |        |      | 2,755    |          |        |   | 13,957     |        
|Investment securities acquired                                                                                     |                                                                  |                                                       | (13,110 | )                                |        |      | (12,502  | )        |        |   | (2,440     | )      
|Purchase of investment properties                                                                                  |                                                                  |                                                       |        |                                  |        |      |         |          |        |   | (1,874     | )      
|Proceeds from sale of investment properties                                                                        |                                                                  |                                                       | 1,619   |                                  |        |      | 2,010    |          |        |   | 12,947     |        
|Proceeds from sale of subsidiary (net of cash sold)                                                                |                                                                  |                                                       |        |                                  |        |      |         |          |        |   | 567,568    |        
|Net cash provided by investing activities of discontinued operations                                               |                                                                  |                                                       |        |                                  |        |      |         |          |        |   | 53,216     |        
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                                                |                                                                  |                                                       | (27,727 | )                                |        |      | (20,840  | )        |        |   | 359,287    |        
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|FINANCING ACTIVITIES                                                                                               |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|Proceeds from borrowings                                                                                           |                                                                  |                                                       |        |                                  |        |      |         |          |        |   | 2,628,500  |        
|Principal payments on debt                                                                                         |                                                                  |                                                       |        |                                  |        |      |         |          |        |   | (2,862,500 | )      
|Dividends paid                                                                                                     |                                                                  |                                                       | (17,276 | )                                |        |      | (17,290  | )        |        |   | (17,617    | )      
|Stock issued for employee benefit and compensation programs                                                        |                                                                  |                                                       | 914     |                                  |        |      | 9,756    |          |        |   | 1,269      |        
|Repurchase of common stock                                                                                         |                                                                  |                                                       | (15,281 | )                                |        |      | (9,642   | )        |        |   | (24,619    | )      
|Net cash provided by financing activities of discontinued operations                                               |                                                                  |                                                       |        |                                  |        |      |         |          |        |   | 24,012     |        
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|NET CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES                                                                 |                                                                  |                                                       | (31,643 | )                                |        |      | (17,176  | )        |        |   | (250,955   | )      
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|INCREASE (DECREASE) IN CASH                                                                                        |                                                                  |                                                       | 32,428  |                                  |        |      | (113,514 | )        |        |   | 137,111    |        
|Cash at beginning of year                                                                                          |                                                                  |                                                       | 35,489  |                                  |        |      | 149,003  |          |        |   | 11,892     |        
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        
|CASH AT END OF YEAR                                                                                                |                                                                  | $                                                     | 67,917  |                                  |        | $    | 35,489   |          |        | $ | 149,003    |        
|                                                                                                                   |                                                                  |                                                       |         |                                  |        |      |          |          |        |   |            |        

See notes to consolidated
financial statements.


24



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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 Southeast and Midwest. In addition, Cosmos owns Cable Vantage, a cable
advertising sales subsidiary; Take Ten productions, a video production
facility; and Broadcast Merchandising Corporation, a professional broadcast
equipment dealership.

The Company completed the sale of its insurance operations on November 1,
2000, as more fully discussed in Note 3. The insurance operations have been
accounted for as discontinued operations.

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.

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 $9,309,000 and $18,693,000 were included
in cash and cash equivalent at December 31, 2002 and 2001, 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 mutli-year historical average of the actual collections experience
at each station. The Company charges accounts receivables 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 Network Affiliations and Goodwill

FCC licenses, network affiliations, 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 it station group
as a whole. These estimates include, among other things, the future cash flows to be generated
by stations, terminal multiples for assumed station sales, discount rates to be used in
present value calculations, and assumed future capital expenditure levels. Actual results
and future market conditions could differ from those estimates and assumptions used.

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
$7,036,000 and $7,244,000 for 2002 and 2001, respectively. Commitments for
license agreements that were executed but were not reported in the accompanying
balance sheets because they were not available for broadcasting were $9,266,000
and $11,703,000 for 2002 and 2001, 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.

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
$34,147,000, $27,322,000, and $26,565,000 in 2002, 2001, and 2000,
respectively. Station revenues also include revenues from network affiliation
contracts. Revenues from network affiliation contracts are recorded as earned
over the life of the contract. Cash payments received in excess of revenue
earned to-date 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 $2,712,000,
$1,636,000, and, $1,636,000 in 2002, 2001, and 2000, respectively.

25



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

THE LIBERTY CORPORATION AND SUBSIDIARIES


Concentration of Credit Risk

A significant portion 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
$2,976,000, $3,198,000, and $2,785,000 for the years 2002, 2001, and 2000,
respectively.

Merchandise or services received are charged to cost and expense when
received or used. Expense related to barter transactions was $3,079,000,
$3,113,000, and $2,665,000 for the years 2002, 2001, and 2000, 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-then-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 other 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
judges the assets to have been impaired and the impairment can be estimated.

Income Taxes

Income taxes are computed using the liability method 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 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 11 Stock Ownership and Stock Option Plans for 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 2001 and 2000 Consolidated
Financial Statements to conform to the 2002 presentation.

3. Discontinued Operations

On June 19, 2000, the Company entered into a Purchase Agreement (the
Purchase Agreement) with Royal Bank of Canada (RBC), a Canadian-chartered
bank, pursuant to which RBC was to acquire from the Company all of the issued
and outstanding shares of capital stock of Liberty Life Insurance Company,
Liberty Insurance Services Corporation, The Liberty Marketing Corporation, LC
Insurance Limited and Liberty Capital Advisors, Inc., for a total of
approximately $648 million, consisting of a dividend from Liberty Life
Insurance Company of up to $70 million and the balance in cash from Royal Bank
of Canada. On September 29, 2000, the shareholders of the Company approved the
Purchase Agreement described above. Accordingly, these entities have been
treated as discontinued operations in the accompanying financial statements.
The transaction closed on November 1, 2000 with Liberty receiving $567.6
million in net cash proceeds and approximately $16 million in non-cash assets
(mainly investments in venture capital funds and low income housing tax
credits).

Operating results in 2000 include operations through September 29, 2000,
the date the shareholders approved the transaction. Results from that date
through the date of sale are included in the gain on the sale of discontinued
operations.

Summarized disclosure of the Companys discontinued operations is as
follows:

|                                                 |  |      |         | 
|------------------------------------------------ |  | ---- | ------- | 
|(In $000's)                                      |  | 2000
|                                                 |  |     
|Revenues                                         |  | $    | 278,796 | 
|Expenses                                         |  |      | 241,884 | 
|                                                 |  |      |         | 
|Income from discontinued operations before taxes |  |      | 36,912  | 
|Income taxes                                     |  |      | 10,851  | 
|                                                 |  |      |         | 
|Income from discontinued operations              |  | $    | 26,061  | 
|                                                 |  |      |         | 

4. Television Station Acquisitions

On February 29, 2000, the Company completed the acquisition of KCBD, the
NBC affiliate in Lubbock, TX in a cash transaction for $59.8 million. This
purchase was funded using proceeds from the Companys credit facility.

On December 1, 2000, the Company completed its acquisition of Civic
Communications (Civic). The agreed-upon purchase price for all of the
outstanding common stock of Civic was $204 million. The Company used proceeds
from the sale of its insurance operations, which was completed November 1,
2000, to fund the transaction. Civic owned and operated WLBT-TV, the NBC
affiliate in Jackson, MS, KLTV-TV, the ABC affiliate in Tyler, TX, and KTRE-TV,
the satellite affiliate of KLTV in Lufkin, TX.

26



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

THE LIBERTY CORPORATION AND SUBSIDIARIES


The operating results of the acquired businesses are included in the
consolidated statements of income from their respective dates of acquisition.

Both of the acquisitions were accounted for by the purchase method of
accounting and, accordingly, the purchase price of the acquired businesses were
allocated to underlying assets and liabilities based on fair values.

At the time of closing, the Company agreed to pay a portion of the
purchase price to the Civic stockholders at a future date. The unpaid purchase
price was remitted to the Civic stockholders during the first quarter of 2001.

The following table sets forth the unaudited pro forma results of
operations as if the acquisitions had been consummated at the beginning of
2000:

|                                  |  |      |         | 
|--------------------------------- |  | ---- | ------- | 
|(In $000's except per share data) |  | 2000
|                                  |  |     
|Net revenues                      |  | $    | 204,588 | 
|Net income                        |  | $    | 36,684  | 
|Earnings per basic share          |  | $    | 1.87    | 
|Earnings per diluted share        |  | $    | 1.86    | 

The pro forma data give effect in the aggregate to the acquisition of
KCBD-TV, which occurred on February 29, 2000, to the sale of Libertys
insurance operations to RBC, which closed on November 1, 2000, and to the
acquisition of Civic, which occurred on December 1, 2000, as if each had
occurred at the beginning of the period presented. The pro forma amounts
include actual operating results prior to each respective acquisition and
adjustments to intangible amortization, depreciation, interest expense and
income taxes. These pro forma amounts do not purport to be indicative of
results that would have occurred had the transactions been in effect for the
periods presented or that may be obtained in the future.

5. Intangible Assets Subject to Amortization

At December 31, 2002 and December 31, 2001, 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 2007 is expected to be as follows:

|            |  |                        |     | 
|----------- |  | ---------------------- | --- | 
|(In $000's) |  | Estimated Amortization
|            |  |                       
|2003        |  | $                      | 240 | 
|2004        |  |                        | 170 | 
|2005        |  |                        | 170 | 
|2006        |  |                        | 170 | 
|2007        |  |                        | 170 | 

6. FCC Licenses and Network Affiliations 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) and $6.7
million ($4.2 million net of income taxes) of amortization expense related to
intangibles that are no longer required to be amortized for the years ended
December 31, 2001 and 2000, respectively. 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 periods ended December
31, 2001 and December 31, 2000 as reported to the adjusted December 31, 2001
and December 31, 2000 net income, had Statement No. 142 been in effect as of
January 1, 2000:

|                                                                                       |  |      |        |      |  |      |        |  |  |   |        | 
|-------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|(In $000's)                                                                            |  | 2002 |        | 2001 |  | 2000
|                                                                                       |  |      |        |      |  |     
|Reported income from continuing
operations                                             |  | $    | 32,995 |      |  | $    | 16,576 |  |  | $ | 24,995 | 
|Add back : Goodwill and indefinite
lived intangible amortization (net of
income taxes) |  |      |       |      |  |      | 9,371  |  |  |   | 4,157  | 
|                                                                                       |  |      |        |      |  |      |        |  |  |   |        | 
|Adjusted income from continuing
operations                                             |  | $    | 32,995 |      |  | $    | 25,947 |  |  | $ | 29,152 | 
|                                                                                       |  |      |        |      |  |      |        |  |  |   |        | 

The following tables reconcile basic and diluted earnings per share as
reported at December 31, 2001 and 2000, to the adjusted December 31, 2001 and
2000 basic and diluted earnings per share, had Statement No. 142 been in effect
as of January 1, 2000:

|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 
|-------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                                                                       |  | 2002 |      | 2001 |  | 2000
|                                                                                       |  |      |      |      |  |     
|Basic earnings per share:                                                              |  |      |      |      |  |      |      |  |  |   |      | 
|Reported basic earnings per share from
continuing operations                           |  | $    | 1.68 |      |  | $    | 0.85 |  |  | $ | 1.27 | 
|Add back : Goodwill and indefinite lived
intangible amortization (net of income taxes) |  |      |     |      |  |      | 0.48 |  |  |   | 0.21 | 
|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 
|Adjusted basic earnings per share from
continuing operations                           |  | $    | 1.68 |      |  | $    | 1.33 |  |  | $ | 1.48 | 
|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 

27



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

THE LIBERTY CORPORATION AND SUBSIDIARIES


|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 
|-------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                                                                       |  | 2002 |      | 2001 |  | 2000
|                                                                                       |  |      |      |      |  |     
|Diluted earnings per share:                                                            |  |      |      |      |  |      |      |  |  |   |      | 
|Reported diluted earnings per share form
continuing operations                         |  | $    | 1.68 |      |  | $    | 0.84 |  |  | $ | 1.27 | 
|Add back : Goodwill and indefinite lived
intangible amortization (net of income taxes) |  |      |     |      |  |      | 0.48 |  |  |   | 0.21 | 
|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 
|Adjusted diluted earnings per share from
continuing operations                         |  | $    | 1.68 |      |  | $    | 1.32 |  |  | $ | 1.48 | 
|                                                                                       |  |      |      |      |  |      |      |  |  |   |      | 

At December 31, 2002 and December 31, 2001, the Companys intangible
assets not subject to amortization were comprised of FCC licenses and network
affiliations.

7.  Investments and Other Assets

The Company realized $401,000, $1,053,000, and $13,987,000 in gains on the
sale of available-for-sale securities in 2002, 2001, and 2000, respectively.
The Company realized $147,000, $15,000, and $1,104,000 in losses on the sale of
available-for-sale securities in 2002, 2001, and 2000, 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:

|                                              |  |              |        |      |  |   |        | 
|--------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | 
|(In $000's)                                   |  | December 31,
|                                              |  |             
|                                              |  | 2002         |        | 2001
|                                              |  |              |        |     
|Marketable equity securities                  |  | $            |       |      |  | $ | 7,733  | 
|Private equity investments                    |  |              | 10,556 |      |  |   | 7,539  | 
|Private debt securities                       |  |              | 11,528 |      |  |   | 3,500  | 
|Real estate related investments               |  |              | 6,306  |      |  |   | 13,379 | 
|Investments in venture capital funds          |  |              | 7,258  |      |  |   | 8,094  | 
|Investments in low income housing tax credits |  |              | 6,343  |      |  |   | 7,311  | 
|Other                                         |  |              | 2,171  |      |  |   | 6,634  | 
|                                              |  |              |        |      |  |   |        | 
|Total investments and other assets            |  | $            | 44,162 |      |  | $ | 54,190 | 

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:



| |  | Marketable equity securities are all considered available-for-sale and
are carried at fair value. The fair values for marketable equity
securities are based on quoted market prices.                                                                                                                                                                                                                                                                                
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | 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, 2002
and 2001, 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 ranging from one to three years.

See Note 15 Fair Values of Financial Instruments for further discussion of
the methods used to estimate the fair values of the Companys financial
instruments.

8. Revolving Credit Facility

In November 2000, the Company sold its insurance operations for
approximately $648 million (See Note 3). The Company used approximately $258
million of its net cash proceeds from this sale to repay its credit facility in
full. The Company had no outstanding debt, nor interest expense, during 2001
or 2002. Interest paid amounted to approximately $15,005,000 in 2000.

In March 2001, the Company entered into a $100 million unsecured 364-day
revolving credit facility with a bank. On May 20, 2002, 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.

28



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

THE LIBERTY CORPORATION AND SUBSIDIARIES


9. 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, 2002
and December 31, 2001, 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 404,400, 240,000, and 684,000 common shares during 2002, 2001 and 2000,
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 16) as of December 31 are as
follows:

|                                           |       |      |        |      |  |   |      |     |  
|------------------------------------------ | ----- | ---- | ------ | ---- |  | - | ---- | --- | -
|(In $000s)                                 |       | 2002 |        | 2001
|                                           |       |      |        |     
|Carrying value of securities               |       | $    | 7,279  |      |  | $ | 233  |    
|Amortized cost of securities               |       |      | (7,000 | )    |  |   | (334 | )  
|                                           |       |      |        |      |  |   |      |    
|Net unrealized appreciation (depreciation) |       |      | 279    |      |  |   | (101 | )  
|Deferred income taxes                      |       |      | (106   | )    |  |   | 38   |    
|                                           |       |      |        |      |  |   |      |    
|                                           | Total |      | $      | 173  |  |   | $    | (63 | )

10. 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.

Net periodic postretirement benefit cost included the following
components:

|                                         |  |      |     |      |  |      |     |  |  |   |     | 
|---------------------------------------- |  | ---- | --- | ---- |  | ---- | --- |  |  | - | --- | 
|(In $000s)                               |  | 2002 |     | 2001 |  | 2000
|                                         |  |      |     |      |  |     
|Service cost                             |  | $    | 29  |      |  | $    | 26  |  |  | $ | 31  | 
|Interest cost                            |  |      | 137 |      |  |      | 163 |  |  |   | 149 | 
|                                         |  |      |     |      |  |      |     |  |  |   |     | 
|Net periodic postretirement benefit cost |  | $    | 166 |      |  | $    | 189 |  |  | $ | 180 | 

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

|                                        |  |      |       |      |  |   |       |  
|--------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|(In $000's)                             |  | 2002 |       | 2001
|                                        |  |      |       |     
|Benefit obligation at beginning of year |  | $    | 1,979 |      |  | $ | 2,437 |  
|Service cost                            |  |      | 29    |      |  |   | 26    |  
|Interest cost                           |  |      | 137   |      |  |   | 163   |  
|Plan participants contributions        |  |      | 156   |      |  |   | 148   |  
|Benefits paid                           |  |      | (305  | )    |  |   | (297  | )
|Actuarial loss                          |  |      | (273  | )    |  |   | (498  | )
|                                        |  |      |       |      |  |   |       |  
|Benefit obligation at end of year       |  | $    | 1,723 |      |  | $ | 1,979 |  

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)                               |  | 2002 |       | 2001
|                                          |  |      |       |     
|Funded status                             |  | $    | 1,723 |      |  | $ | 1,979 |  
|Unrecognized prior service cost           |  |      | (21   | )    |  |   | (23   | )
|Unrecognized net gain (loss)              |  |      | 152   |      |  |   | (119  | )
|                                          |  |      |       |      |  |   |       |  
|Accrued postretirement benefit obligation |  | $    | 1,854 |      |  | $ | 1,837 |  

The weighted-average discount rate is 6.75% and 7.25% for 2002 and 2001,
respectively. 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 2004 and thereafter. At December 31, 2001, a 5.5% annual
rate of increase in the per capita cost of covered medical benefits was assumed
for 2002. 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.

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             |  | $           | 12 |             |  | $ | (13 | )

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. Contributions for this
component of the Plan were $3,022,000, $2,975,000, and $2,271,000 in 2002,
2001, and 2000, 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 $1,551,000, $1,214,000, and $1,088,000 in 2002, 2001, and
2000, respectively.

29



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

THE LIBERTY CORPORATION AND SUBSIDIARIES


11. 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, 2002, 58
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 certificates for the restricted shares with
executed stock powers attached. 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. As
required by the Program, the sale of the Companys insurance operations on
November 1, 2000, resulted in the vesting of all of the then outstanding stock
options.

Of the non-qualified options outstanding, 454,259 were exercisable at
December 31, 2002; 305,278 were exercisable at December 31, 2001; and 987,485
were exercisable at December 31, 2000. The options expire on various dates
beginning June 15, 2003, and ending October 4, 2011.

In accordance with the provisions SFAS No. 123, Accounting for
Stock-Based Compensation", the Company has elected to 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
$990,000 and $757,000 for the years ended December 31, 2002 and 2001,
respectively. Commensurate with the sale of the Companys insurance operations
on November 1, 2000, all of the then outstanding restricted stock vested. The
expense related to this required vesting was included in the gain on the sale
of discontinued operations. Prior to the sale of the insurance operations, the
Company had expensed approximately $2,438,000 in 2000.

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 has been determined as if the Company had accounted for its employee
stock options under the fair value method of that statement.

The weighted average grant-date estimated fair value of grants during
2002, 2001, and 2000 using a Black-Scholes option valuation model, and the
weighted average assumptions used to determine the estimated fair value are as
follows:

|                                                               |                                 |   |         |      |         |   |         |      |   |   |      |      |  
|-------------------------------------------------------------- | ------------------------------- | - | ------- | ---- | ------- | - | ------- | ---- | - | - | ---- | ---- | -
|                                                               |                                 |   | 2002    |      | 2001    |   | 2000   
|                                                               |                                 |   |         |      |         |   |        
|Estimated fair value                                           |                                 | $ | 9.55    |      |         | $ | 8.27    |      |   | $ | 8.98 |     
|Underlying assumptions used to
determine estimated fair value: |                                 |   |         |      |         |   |         |      |   |   |      |     
|                                                               | Risk free interest rate         |   |         | 4.40 | %       |   |         | 4.88 | % |   |      | 6.6  | %
|                                                               | Dividend yield                  |   |         | 2.2  | %       |   |         | 2.6  | % |   |      | 2.8  | %
|                                                               | Expected stock price volatility |   |         | 0.23 |         |   |         | 0.23 |   |   |      | 0.23 |  
|                                                               | Weighted average expected life  |   | 6 years |      | 7 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)                               |                             | 2002 |      | 2001    |   | 2000
|                                                                    |                             |      |      |         |   |     
|Stock-based compensation cost
included in net income (net of
taxes) |                             | $    | 619  |         |   | $    | 469  |        |  | $ | 1,487  |       
|Net Income (loss):                                                  |                             |      |      |         |   |      |      |        |  |   |        |       
|                                                                    | As Reported                 |      | $    | (14,393 | ) |      | $    | 16,576 |  |   | $      | 53,558 | 
|Pro forma compensation expense
(net of taxes)                       |                             |      | (901 | )       |   |      | (688 | )      |  |   | (2,688 | )     
|                                                                    |                             |      |      |         |   |      |      |        |  |   |        |       
|                                                                    | Pro forma net income (loss) |      | $    | (15,294 | ) |      | $    | 15,888 |  |   | $      | 50,870 | 
|Basic Earnings (Loss) per Share:                                    |                             |      |      |         |   |      |      |        |  |   |        |       
|                                                                    | As Reported                 |      | $    | (0.73   | ) |      | $    | 0.85   |  |   | $      | 2.74   | 
|                                                                    | Pro forma                   |      |      | (0.78   | ) |      |      | 0.81   |  |   |        | 2.61   | 
|Diluted Earnings (Loss) per Share:                                  |                             |      |      |         |   |      |      |        |  |   |        |       
|                                                                    | As Reported                 |      | $    | (0.73   | ) |      | $    | 0.84   |  |   | $      | 2.72   | 
|                                                                    | Pro forma                   |      |      | (0.78   | ) |      |      | 0.81   |  |   |        | 2.58   | 

30



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

THE LIBERTY CORPORATION AND SUBSIDIARIES


The following schedule summarizes activity in the Program during the three
years ending December 31, 2002:

|                                 |  |                   |          |                 |  |            |       |                  |  |               |           |   |  |   |       | 
|-------------------------------- |  | ----------------- | -------- | --------------- |  | ---------- | ----- | ---------------- |  | ------------- | --------- | - |  | - | ----- | 
|                                 |  |                   |          |                 |  |            |       |                  |  | Non-Qualified
|                                 |  | Restricted Shares |          | Stock Options  
|                                 |  |                   |          |                
|                                 |  | Number            |          | Market Price at |  | Number     |       | Average Exercise
|                                 |  | of Shares         |          | Date Given      |  | of Options |       | Price           
|                                 |  |                   |          |                 |  |            |       |                 
|Outstanding at
January 1, 2000   |  |                   | 166,254  |                 |  |            |       |                  |  |               | 840,358   |   |  | $ | 39.60 | 
|Awarded                          |  |                   | 285,560  |                 |  | $          | 31.39 |                  |  |               | 261,460   |   |  | $ | 32.12 | 
|Vested                           |  |                   | (436,564 | )               |  |            | 35.36 |                  |  |               |           |   |  |   |       | 
|Exercised                        |  |                   |          |                 |  |            |       |                  |  |               | (38,565   | ) |  |   | 30.37 | 
|Forfeited                        |  |                   | (15,250  | )               |  |            | 51.88 |                  |  |               | (57,328   | ) |  |   | 41.97 | 
|                                 |  |                   |          |                 |  |            |       |                  |  |               |           |   |  |   |       | 
|Outstanding at
December 31, 2000 |  |                   |         |                 |  |            |       |                  |  |               | 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 | 

During 2000, in connection with the sale of the Companys insurance
operations, 129,875 unrestricted shares having a grant date fair value of
$30.88 per share were granted to executives of the insurance operations and are
included in the awarded and vested amounts disclosed above.

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

|                |                       |             |         |           |  |          |      |          |      |          |        |       |      |  |         |         |  |   |       |       | 
|--------------- | --------------------- | ----------- | ------- | --------- |  | -------- | ---- | -------- | ---- | -------- | ------ | ----- | ---- |  | ------- | ------- |  | - | ----- | ----- | 
|                |                       |             |         |           |  |          | Wtd. |          | Wtd. |          |        |       |      |  | Wtd.   
|                |                       |             |         |           |  |          | Avg. |          | Avg. |          | Number |       | Avg.
|Range of        |                       | Number      |         | Remaining |  | Exercise |      | Exercis- |      | Exercise
|Exercise Prices |                       | Outstanding |         | Life      |  | Price    |      | able     |      | Price   
|                |                       |             |         |           |  |          |      |          |      |         
|$25.75 - $29.99 |                       |             | 20,500  |           |  |          | 1.14 |          |      | $        | 26.72  |       |      |  | 20,500  |         |  | $ | 26.72 |      
|$30.00 - $39.99 |                       |             | 943,299 |           |  |          | 8.09 |          |      |          | 33.78  |       |      |  | 249,814 |         |  |   | 33.45 |      
|$40.00 - $51.88 |                       |             | 183,945 |           |  |          | 4.98 |          |      |          | 42.63  |       |      |  | 183,945 |         |  |   | 42.63 |      
|                |                       |             |         |           |  |          |      |          |      |          |        |       |      |  |         |         |  |   |       |      
|                | Total or
wtd. average |             |         | 1,147,744 |  |          |      | 7.47     |      |          | $      | 35.07 |      |  |         | 454,259 |  |   | $     | 36.86 | 

At December 31, 2002, there were 661,088 shares of the Companys stock
reserved for future grants under the Program.

12.  Provision for Income Taxes

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

|                                                      |                 |      |         |        |  |      |        |       |  |   |         |        | 
|----------------------------------------------------- | --------------- | ---- | ------- | ------ |  | ---- | ------ | ----- |  | - | ------- | ------ | 
|(In $000's)                                           |                 | 2002 |         | 2001   |  | 2000
|                                                      |                 |      |         |        |  |     
|Current:                                              |                 |      |         |        |  |      |        |       |  |   |         |       
|                                                      | Federal         |      | $       | 7,274  |  |      | $      |      |  |   | $       | 14,082 | 
|                                                      | State and local |      |         | 622    |  |      |        | 663   |  |   |         | 1,437  | 
|                                                      |                 |      |         |        |  |      |        |       |  |   |         |       
|Total current                                         |                 |      | 7,896   |        |  |      | 663    |       |  |   | 15,519  |       
|Deferred:                                             |                 |      |         |        |  |      |        |       |  |   |         |       
|                                                      | Federal         |      |         | 10,960 |  |      |        | 8,747 |  |   |         | 672    | 
|                                                      | State and local |      |         | 940    |  |      |        | 750   |  |   |         | 65     | 
|                                                      |                 |      |         |        |  |      |        |       |  |   |         |        | 
|Total deferred                                        |                 |      | 11,900  |        |  |      | 9,497  |       |  |   | 737     |       
|                                                      |                 |      |         |        |  |      |        |       |  |   |         |        | 
|Total tax provision                                   |                 | $    | 19,796  |        |  | $    | 10,160 |       |  | $ | 16,256  |       
|                                                      |                 |      |         |        |  |      |        |       |  |   |         |       
|Discontinued operations                               |                 | $    |        |        |  | $    |       |       |  | $ | 142,521 |       
|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 reporting
purposes and the amounts used for income tax purposes.

Significant components of the Companys deferred tax liabilities and
assets as of December 31, 2002 and 2001 are as follows:

|                               |                                                 |      |         |        |   |   |         |         |  
|------------------------------ | ----------------------------------------------- | ---- | ------- | ------ | - | - | ------- | ------- | -
|(In $000's)                    |                                                 | 2002 |         | 2001  
|                               |                                                 |      |         |       
|Deferred tax liabilities:      |                                                 |      |         |        |   |   |         |        
|                               | Basis in fixed assets                           |      | $       | 11,837 |   |   | $       | 12,832  |  
|                               | Basis in intangible assets                      |      |         | 88,243 |   |   |         | 110,724 |  
|                               | Basis in Partnerships                           |      |         | 411    |   |   |         |        |  
|                               | Other, net                                      |      |         |       |   |   |         | 763     |  
|                               |                                                 |      |         |        |   |   |         |        
|Total deferred tax liabilities |                                                 |      | 100,491 |        |   |   | 124,319 |        
|Deferred tax assets:           |                                                 |      |         |        |   |   |         |        
|                               | Book over tax partnership losses                |      |         |       |   |   |         | 973     |  
|                               | Bad debts                                       |      |         | 839    |   |   |         | 869     |  
|                               | Net operating losses/tax credits/capital
losses |      |         | 8,607  |   |   |         | 17,731  |  
|                               | Employee benefits                               |      |         | 1,582  |   |   |         | 1,914   |  
|                               | Impairment of assets                            |      |         | 2,046  |   |   |         | 741     |  
|                               | Unearned revenue                                |      |         | 2,178  |   |   |         | 257     |  
|                               | Other, net                                      |      |         | 550    |   |   |         | --      |  
|                               | Valuation reserves                              |      |         | (1,450 | ) |   |         | (1,450  | )
|                               |                                                 |      |         |        |   |   |         |        
|Total deferred tax assets      |                                                 |      | 14,352  |        |   |   | 21,035  |        
|                               |                                                 |      |         |        |   |   |         |        
|Net deferred tax liability     |                                                 | $    | 86,139  |        |   | $ | 103,284 |        

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)                             |  | 2002 |        | 2001 |  | 2000
|                                        |  |      |        |      |  |     
|Federal income tax rate                 |  |      | 35     | %    |  |      | 35     | % |  |   | 35     | %
|Rate applied to pre-tax income          |  | $    | 18,476 |      |  | $    | 9,358  |   |  | $ | 14,438 |  
|State taxes, net of federal tax
benefit |  |      | 2,275  |      |  |      | 1,503  |   |  |   | 879    |  
|Tax credits                             |  |      | (1,000 | )    |  |      | (1,200 | ) |  |   | (750   | )
|Non-deductible compensation             |  |      |       |      |  |      |       |   |  |   | 761    |  
|Other                                   |  |      | 45     |      |  |      | 499    |   |  |   | 928    |  
|                                        |  |      |        |      |  |      |        |   |  |   |        |  
|Provision for income taxes              |  | $    | 19,796 |      |  | $    | 10,160 |   |  | $ | 16,256 |  

As of December 31, 2002, the Company has federal operating loss
carryforwards of approximately $2,700,000. 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
$151,000,000 expiring from 2003 to 2017. The Company utilized state operating
loss carryforwards of approximately $1,000,000 and $27,000,000 in 2002 and
2001, respectively. Income taxes paid were approximately $8,954,000, $663,000,
and $139,399,000 in 2002, 2001, and 2000, respectively.

31



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

THE LIBERTY CORPORATION AND SUBSIDIARIES


13. Quarterly Results of Operations (Unaudited)

Quarterly results of operations for each of the years ended December 31,
2002 and 2001 are as follows:

|                                                                        |                   |                    |          |         |         |   |          |       |         |   |        |       |  |   |        |        | 
|----------------------------------------------------------------------- | ----------------- | ------------------ | -------- | ------- | ------- | - | -------- | ----- | ------- | - | ------ | ----- |  | - | ------ | ------ | 
|(In $000's, except                                                      |                   |                    |          |         |         |   |          |       |         |   |        |       |  |   |        |       
|per share data)                                                         |                   | Quarter Ended 2002
|                                                                        |                   |                   
|                                                                        |                   |                    | March 31 |         | June 30 |   | Sept. 30 |       | Dec. 31
|                                                                        |                   |                    |          |         |         |   |          |       |        
|Net revenues                                                            |                   | $                  | 42,826   |         |         | $ | 51,805   |       |         | $ | 50,166 |       |  | $ | 61,570 |       
|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   |       

|                                                                               |  |                    |        |         |  |          |        |         |  |   |        |   |  |   |        | 
|------------------------------------------------------------------------------ |  | ------------------ | ------ | ------- |  | -------- | ------ | ------- |  | - | ------ | - |  | - | ------ | 
|(In $000's, except                                                             |  |                    |        |         |  |          |        |         |  |   |        |   |  |   |        | 
|per share data)                                                                |  | Quarter Ended 2001
|                                                                               |  |                   
|                                                                               |  | March 31           |        | June 30 |  | Sept. 30 |        | Dec. 31
|                                                                               |  |                    |        |         |  |          |        |        
|Net revenues                                                                   |  | $                  | 41,942 |         |  | $        | 48,138 |         |  | $ | 40,157 |   |  | $ | 48,048 | 
|Operating income                                                               |  | $                  | 3,576  |         |  | $        | 9,208  |         |  | $ | 365    |   |  | $ | 9,501  | 
|Income (Loss) before
the cumulative
effect of a change
in accounting
principle |  | $                  | 4,293  |         |  | $        | 7,280  |         |  | $ | (961   | ) |  | $ | 5,964  | 
|Net income (loss)                                                              |  | $                  | 4,293  |         |  | $        | 7,280  |         |  | $ | (961   | ) |  | $ | 5,964  | 
|Basic earnings
(loss) per share                                                |  | $                  | 0.22   |         |  | $        | 0.37   |         |  | $ | (0.05  | ) |  | $ | 0.30   | 
|Diluted earnings
(loss) per share                                              |  | $                  | 0.22   |         |  | $        | 0.37   |         |  | $ | (0.05  | ) |  | $ | 0.30   | 

14. 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, 2002, 2001, and 2000:

|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|------------------------------------------------------------------------------------------- |  | ------------------ | ------ | -------------------- |  | ---------------- | ------ |  |  | - | ---- | 
|(In $000's, except per share data)                                                          |  |                    |        |                      |  |                  |        |  |  |   |      | 
|For the Year Ended 2002                                                                     |  | Income (Numerator) |        | Shares (Denominator) |  | Per Share Amount
|                                                                                            |  |                    |        |                      |  |                 
|Income from continuing operations                                                           |  | $                  | 32,995 |                      |  |                  |        |  |  |   |      | 
|Basic EPS from continuing operations:                                                       |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Income from continuing operations available to
common shareholders                          |  |                    | 32,995 |                      |  |                  | 19,610 |  |  | $ | 1.68 | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Effect of Dilutive Securities:                                                              |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Stock options                                                                               |  |                    |       |                      |  |                  | 84     |  |  |   |      | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Diluted EPS from continuing operations:                                                     |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Income from continuing operations available to
common shareholders plus assumed conversions |  | $                  | 32,995 |                      |  |                  | 19,694 |  |  | $ | 1.68 | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 

|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|------------------------------------------------------------------------------------------- |  | ------------------ | ------ | -------------------- |  | ---------------- | ------ |  |  | - | ---- | 
|(In $000's, except per share data)                                                          |  |                    |        |                      |  |                  |        |  |  |   |      | 
|For the Year Ended 2001                                                                     |  | Income (Numerator) |        | Shares (Denominator) |  | Per Share Amount
|                                                                                            |  |                    |        |                      |  |                 
|Income from continuing operations                                                           |  | $                  | 16,576 |                      |  |                  |        |  |  |   |      | 
|Basic EPS from continuing operations:                                                       |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Income from continuing operations available to
common shareholders                          |  |                    | 16,576 |                      |  |                  | 19,581 |  |  | $ | 0.85 | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Effect of Dilutive Securities:                                                              |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Stock options                                                                               |  |                    |       |                      |  |                  | 99     |  |  |   |      | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Diluted EPS from continuing operations:                                                     |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Income from continuing operations available to
common shareholders plus assumed conversions |  | $                  | 16,576 |                      |  |                  | 19,680 |  |  | $ | 0.84 | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 

|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|------------------------------------------------------------------------------------------- |  | ------------------ | ------ | -------------------- |  | ---------------- | ------ |  |  | - | ---- | 
|(In $000's, except per share data)                                                          |  |                    |        |                      |  |                  |        |  |  |   |      | 
|For the Year Ended 2000                                                                     |  | Income (Numerator) |        | Shares (Denominator) |  | Per Share Amount
|                                                                                            |  |                    |        |                      |  |                 
|Income from continuing
operations                                                           |  | $                  | 24,995 |                      |  |                  |        |  |  |   |      | 
|Less: Preferred stock dividends                                                             |  |                    | (365   | )                    |  |                  |        |  |  |   |      | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Basic EPS from continuing
operations:                                                       |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Income from continuing
operations available to common
shareholders                          |  |                    | 24,630 |                      |  |                  | 19,379 |  |  | $ | 1.27 | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Effect of Dilutive Securities:                                                              |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Stock options                                                                               |  |                    |       |                      |  |                  | 75     |  |  |   |      | 
|Redeemable preferred stock                                                                  |  |                    | 365    |                      |  |                  | 267    |  |  |   |      | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Diluted EPS from continuing
operations:                                                     |  |                    |        |                      |  |                  |        |  |  |   |      | 
|Income from continuing
operations available to common
shareholders plus assumed
conversions |  | $                  | 24,995 |                      |  |                  | 19,721 |  |  | $ | 1.27 | 
|                                                                                            |  |                    |        |                      |  |                  |        |  |  |   |      | 

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.

15. 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.

32



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

THE LIBERTY CORPORATION AND SUBSIDIARIES




| |  | 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 theses 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.

16.  Comprehensive Income

The components of other comprehensive income (loss) and the related tax
effects, for the years 2002, 2001, and 2000 are as follows:

|                                                                    |  |                     |      |                   |  |                     |      |   |  |   |     |  
|------------------------------------------------------------------- |  | ------------------- | ---- | ----------------- |  | ------------------- | ---- | - |  | - | --- | -
|(In $000's)                                                         |  |                     |      |                   |  |                     |      |   |  |   |     |  
|For the year Ended                                                  |  |                     |      |                   |  | Income Tax          |      |   |  |  
|December 31, 2002                                                   |  | Amount Before Taxes |      | (Expense) Benefit |  | Amount Net of 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)                                                         |  |                     |        |                   |  |                     |      |   |  |   |      |  
|For the Year Ended                                                  |  |                     |        |                   |  | Income Tax          |      |   |  |  
|December 31, 2001                                                   |  | Amount Before Taxes |        | (Expense) Benefit |  | Amount Net of Taxes
|                                                                    |  |                     |        |                   |  |                    
|Unrealized gain on available for sale
securities                    |  | $                   | 1,029  |                   |  | $                   | (391 | ) |  | $ | 638  |  
|Less: reclassification adjustment for losses
realized in net income |  |                     | (1,130 | )                 |  |                     | 429  |   |  |   | (701 | )
|                                                                    |  |                     |        |                   |  |                     |      |   |  |   |      |  
|Net unrealized loss                                                 |  | $                   | (101   | )                 |  | $                   | 38   |   |  | $ | (63  | )
|                                                                    |  |                     |        |                   |  |                     |      |   |  |   |      |  
|Total comprehensive income (loss)                                   |  | $                   | (101   | )                 |  | $                   | 38   |   |  | $ | (63  | )

|                                                                   |  |                     |       |                   |  |                     |      |   |  |   |     | 
|------------------------------------------------------------------ |  | ------------------- | ----- | ----------------- |  | ------------------- | ---- | - |  | - | --- | 
|(In $000's)                                                        |  |                     |       |                   |  |                     |      |   |  |   |     | 
|For the Year Ended                                                 |  |                     |       |                   |  | Income Tax          |      |   |  |  
|December 31, 2000                                                  |  | Amount Before Taxes |       | (Expense) Benefit |  | Amount Net of Taxes
|                                                                   |  |                     |       |                   |  |                    
|Unrealized gain on
available for sale
securities                   |  | $                   | 323   |                   |  | $                   | (113 | ) |  | $ | 210 | 
|Less: reclassification
adjustment for gains
realized in net income |  |                     | 739   |                   |  |                     | (259 | ) |  |   | 480 | 
|                                                                   |  |                     |       |                   |  |                     |      |   |  |   |     | 
|Net unrealized income                                              |  | $                   | 1,062 |                   |  | $                   | 372  |   |  | $ | 690 | 
|                                                                   |  |                     |       |                   |  |                     |      |   |  |   |     | 
|Total comprehensive income                                         |  | $                   | 1,062 |                   |  | $                   | 372  |   |  | $ | 690 | 

17. 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, 2002, 2001, and 2000, respectively:

|                                                      |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |         | 
|----------------------------------------------------- | ----------------------------- | ------------ | ------- | ------- |  | ----------------- | ------ | ------ |  | - | ------- | ------ |  | - | ------- | ------- | 
|(In $000's)                                           |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |        
|As of and For the Year                                |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |        
|Ended December 31, 2002                               |                               | Broadcasting |         | Cable   |  | Corporate & Other |        | Total 
|                                                      |                               |              |         |         |  |                   |        |       
|Revenues (net of commissions)                         |                               | $            | 190,147 |         |  | $                 | 15,788 |        |  | $ | 432     |        |  | $ | 206,367 |        
|Expenses:                                             |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |        
|                                                      | Operating                     |              |         | 109,350 |  |                   |        | 12,886 |  |   |         | 14,194 |  |   |         | 136,430 | 
|                                                      | Depreciation and amortization |              |         | 15,813  |  |                   |        | 623    |  |   |         | 1,326  |  |   |         | 17,762  | 
|                                                      |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |        
|Total operating expenses                              |                               |              | 125,163 |         |  |                   | 13,509 |        |  |   | 15,520  |        |  |   | 154,192 |        
|Operating income                                      |                               |              | 64,984  |         |  |                   | 2,279  |        |  |   | (15,088 | )      |  |   | 52,175  |        
|Net investment income                                 |                               |              |         |         |  |                   |        |        |  |   | 616     |        |  |   | 616     |        
|Interest expense                                      |                               |              |         |         |  |                   |        |        |  |   |        |        |  |   |        |        
|                                                      |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |        
|Income from continuing operations before income
taxes |                               |              |         |         |  |                   |        |        |  |   |         |        |  | $ | 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                                |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |        
|Ended December 31, 2001                               |                               | Broadcasting |         | Cable   |  | Corporate & Other |        | Total 
|                                                      |                               |              |         |         |  |                   |        |       
|Revenues (net of
commissions)                         |                               | $            | 165,039 |         |  | $                 | 12,170 |        |  | $ | 1,076   |        |  | $ | 178,285 |        
|Expenses:                                             |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |        
|                                                      | Operating                     |              |         | 100,231 |  |                   |        | 11,446 |  |   |         | 11,988 |  |   |         | 123,665 | 
|                                                      | Depreciation and
amortization |              |         | 29,453  |  |                   |        | 635    |  |   |         | 1,882  |  |   |         | 31,970  | 
|                                                      |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |        
|Total operating expenses                              |                               |              | 129,684 |         |  |                   | 12,081 |        |  |   | 13,870  |        |  |   | 155,635 |        
|Operating income                                      |                               |              | 35,355  |         |  |                   | 89     |        |  |   | (12,794 | )      |  |   | 22,650  |        
|Net investment income                                 |                               |              |         |         |  |                   |        |        |  |   | 4,086   |        |  |   | 4,086   |        
|Interest expense                                      |                               |              |         |         |  |                   |        |        |  |   |        |        |  |   |        |        
|                                                      |                               |              |         |         |  |                   |        |        |  |   |         |        |  |   |         |        
|Income from continuing operations before
income taxes |                               |              |         |         |  |                   |        |        |  |   |         |        |  | $ | 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  |        

|                                                      |                               |              |         |        |  |                   |        |        |  |   |         |        |  |   |         |         | 
|----------------------------------------------------- | ----------------------------- | ------------ | ------- | ------ |  | ----------------- | ------ | ------ |  | - | ------- | ------ |  | - | ------- | ------- | 
|(In $000's)                                           |                               |              |         |        |  |                   |        |        |  |   |         |        |  |   |         |        
|As of and For the Year                                |                               |              |         |        |  |                   |        |        |  |   |         |        |  |   |         |        
|Ended December 31, 2000                               |                               | Broadcasting |         | Cable  |  | Corporate & Other |        | Total 
|                                                      |                               |              |         |        |  |                   |        |       
|Revenues (net of
commissions)                         |                               | $            | 159,822 |        |  | $                 | 11,723 |        |  | $ | 2,127   |        |  | $ | 173,672 |        
|Expenses:                                             |                               |              |         |        |  |                   |        |        |  |   |         |        |  |   |         |        
|                                                      | Operating                     |              |         | 86,249 |  |                   |        | 10,151 |  |   |         | 17,254 |  |   |         | 113,654 | 
|                                                      | Depreciation and
amortization |              |         | 19,033 |  |                   |        | 592    |  |   |         | 1,472  |  |   |         | 21,097  | 
|                                                      |                               |              |         |        |  |                   |        |        |  |   |         |        |  |   |         |        
|Total operating expenses                              |                               |              | 105,282 |        |  |                   | 10,743 |        |  |   | 18,726  |        |  |   | 134,751 |        
|Operating income                                      |                               |              | 54,540  |        |  |                   | 980    |        |  |   | (16,599 | )      |  |   | 38,921  |        
|Net investment income                                 |                               |              |         |        |  |                   |        |        |  |   | 16,696  |        |  |   | 16,696  |        
|Interest expense                                      |                               |              |         |        |  |                   |        |        |  |   | 14,366  |        |  |   | 14,366  |        
|                                                      |                               |              |         |        |  |                   |        |        |  |   |         |        |  |   |         |        
|Income from continuing
operations before
income taxes |                               |              |         |        |  |                   |        |        |  |   |         |        |  | $ | 41,251  |        
|                                                      |                               |              |         |        |  |                   |        |        |  |   |         |        |  |   |         |        
|Segment assets                                        |                               | $            | 633,103 |        |  | $                 | 4,418  |        |  | $ | 258,486 |        |  | $ | 896,007 |        
|Expenditures for
property, plant, and
equipment       |                               | $            | 9,032   |        |  | $                 | 611    |        |  | $ | 48      |        |  | $ | 9,691   |        

33



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

THE LIBERTY CORPORATION AND SUBSIDIARIES


18. 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
$1,023,000, $871,000 and $674,000 in 2002, 2001, and 2000, respectively.

Future commitments under operating leases are shown below:

|           |  |             |       | 
|---------- |  | ----------- | ----- | 
|Year       |  | (In $000's)
|           |  |            
|2003       |  | $           | 579   | 
|2004       |  |             | 370   | 
|2005       |  |             | 323   | 
|2006       |  |             | 316   | 
|2007       |  |             | 40    | 
|Thereafter |  |             | 8     | 
|           |  |             |       | 
|Total      |  | $           | 1,636 | 

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
$1,200,000 over the next one to three years, and funding of its private debt
and equity holdings of approximately $4,000,000 during 2003.

34



---



##### 



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, 2002 and 2001, and
the related consolidated statements of income, shareholders equity and
cash flows for each of the three years in the period ended December 31,
2002. 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, 2002
and 2001, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 2002, 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 6 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 has changed its method of accounting for goodwill and other
intangible assets.

/s/ Ernst & Young LLP

Greenville, South Carolina
February 4, 2003

35



---



##### 



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

None.

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 6, 2003 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 63

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 48

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 60

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 60

Vice President, General Counsel & Secretary of Liberty since January, 1982

Secretary and Counsel of Cosmos since February, 1982

JONATHAN W. NORWOOD, Age 34

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

Item 11.   Executive Compensation

Information concerning Executive Compensation and transactions is
contained in The Liberty Corporation Proxy Statement for the May 6, 2003 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
6, 2003 Annual Meeting of Shareholders and is incorporated in this Item 12 by
reference.

36



---



##### 



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 6, 2003 Annual
Meeting of Shareholders and is incorporated in this Item 13 by reference.

Item 14. 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 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, 2002, are submitted in
Part II, Item 8 of this report:



| |  | Consolidated Balance Sheets  December 31, 2002 and 2001                                     
| |  | ---------------------------------------------------------------------------------------------
|
| |  | Consolidated Statements of Income  For the three years ended December
31, 2002              
|
| |  | Consolidated Statements of Shareholders Equity  For the three years
ended December 31, 2002
|
| |  | Consolidated Statements of Cash Flows  For the three years ended
December 31, 2002          
|
| |  | Notes to Consolidated Financial Statements  December 31, 2002                               
|
| |  | Report of Independent Auditors                                                               

The following consolidated financial statement schedules of The Liberty
Corporation and Subsidiaries are 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.

37



---



##### 



(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 Third
Amendment To Credit Agreement dated May 20, 2002 (filed as Exhibit 10 to
the Registrants Quarterly Report on Form 10Q for the quarter ended June
30, 2002, and incorporated herein by reference)                                                                                                                                                                                                               
|
| | 10.1 |  | See Credit Agreement dated March 21, 2001, and the related Third
Amendment to Credit Agreement dated May 20, 2002, (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 14 of the Notes to Consolidated
Financial Statements filed on page 32 of this report.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | 21.  |  | The Liberty Corporation and Subsidiaries, List of Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | 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.                                                                                                                                                                                                                                                                                                                                                                                                       

(b). Reports on Form 8-K



| |  | The Company filed a current report on Form 8-K dated November 5, 2002
with respect to the press release announcing its third quarter 2002
operating results.                                                                                                                    
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company filed a current report on Form 8-K dated November 5, 2002
with respect to The Liberty Corp. declaring a regular quarterly
dividend of 22 cents per share on its common stock, payable on January
3, 2003 to shareholders of record on December 13, 2002             
|
| |  | The Company filed a current report on Form 8-K dated November 7, 2002
with respect to the certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to section 906 f the Sarbanes-Oxley Act of 2002
made by its Chief Executive Officer and Chief Financial Officer.

38



---



##### 



(c). Exhibits Filed With This Report



| | 11. |  | The Liberty Corporation and Subsidiaries Consolidated Earnings per
Share Computation included in Note 14 of the Notes to Consolidated
Financial Statements filed on page 32 of this report.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 21. |  | The Liberty Corporation and Subsidiaries, List of Subsidiaries                                                                                                                               

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



| |  |  | II- Valuation and Qualifying Accounts and Reserves  For the Three Years Ended December
31, 2002
| |  |  | ------------------------------------------------------------------------------------------------

THE LIBERTY CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 2002
(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, 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                  |  | $          | 0     |            |  | $          | 1,450 |            |  | $         |  |            |  | $ |      |     |  | $ | 1,450 | 
|                                                                         |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 
|Year
Ended December 31, 2000
Accounts receivable -
reserve for bad debts |  | $          | 1,319 |            |  | $          | 1,255 |            |  | $         |  |            |  | $ | 356   | (a) |  | $ | 2,218 | 
|                                                                         |  |            |       |            |  |            |       |            |  |           |   |            |  |   |       |     |  |   |       | 

Notes:



---

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

39



---



##### 



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
24th day
of March, 2003.

|                                  |  |     |  |                                                 
|--------------------------------- |  | --- |  | ------------------------------------------------
|THE LIBERTY CORPORATIONRegistrant |  | By: |  | /s/ Hayne HippHayne 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 24th day of March, 2003.

|     |  |                                                                |  |      |  |                                                                       
|---- |  | -------------------------------------------------------------- |  | ---- |  | ----------------------------------------------------------------------
|By:  |  | /s/ Howard L. SchrottHoward L. Schrott
Chief Financial Officer |  | *By: |  | /s/ John H. Mullin IIIJohn H. Mullin III
Director                     
|    
|     |  |                                                                |  |      |  |                                                                       
|    
|*By: |  | /s/ Edward E. CrutchfieldEdward E. Crutchfield
Director        |  | *By: |  | /s/ Benjamin F. PaytonBenjamin F. Payton
Director                     
|    
|     |  |                                                                |  |      |  |                                                                       
|    
|*By: |  | /s/ John R. FarmerJohn R. Farmer
Director                      |  | *By: |  | /s/ J. Thurston RoachJ. Thurston Roach
Director                       
|    
|     |  |                                                                |  |      |  |                                                                       
|    
|By:  |  | /s/ Hayne HippHayne Hipp
Director                              |  | *By: |  | /s/ Eugene E. Stone, IVEugene E. Stone, IV
Director                   
|    
|     |  |                                                                |  |      |  |                                                                       
|    
|*By: |  | /s/ William O. McCoyWilliam O. McCoy
Director                  |  | *By: |  | /s/ William B. TimmermanWilliam B. Timmerman
Director                 
|    
|     |  |                                                                |  |      |  |                                                                       
|    
|*By: |  | /s/ Frank E. MeltonFrank E. Melton
Director                    |  | *By: |  | /s/ Martha G. Williams*Martha G. Williams, as
Special Attorney in Fact

40



---



##### 



CERTIFICATIONS

I, Hayne Hipp, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of The Liberty Corporation;                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                  



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
|
| | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: March 24, 2003

/s/ Hayne Hipp
Hayne Hipp
Chairman and Chief Executive Officer

41



---



##### 



CERTIFICATIONS

I, Howard L. Schrott, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of The Liberty Corporation;                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                  



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
|
| | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: March 24, 2003
/s/ Howard L. Schrott
Howard L. Schrott
Chief Financial Officer

42



---



##### 



Annual Report on Form 10-K
The Liberty Corporation
December 31, 2002

Index to Exhibits

|         |  |                                                                                                                                                                                                                                  |        |  |    | 
|-------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ |  | -- | 
|         |  |                                                                                                                                                                                                                                  | Page  
|EXHIBITS |  |                                                                                                                                                                                                                                  | Number
|         |  |                                                                                                                                                                                                                                  |       
|11.      |  | The Liberty Corporation and Subsidiaries Consolidated Earnings Per Share
Computation (incorporated herein by reference to Note 14 of the Notes to
Consolidated Financial Statements included in Part II Item 8 of this
report) |        |  | 32 | 
|         |  |                                                                                                                                                                                                                                  |        |  |    | 
|21.      |  | The Liberty Corporation and Subsidiaries, List of Significant Subsidiaries                                                                                                                                                       |        |  | 44 | 
|         |  |                                                                                                                                                                                                                                  |        |  |    | 
|23       |  | Consent of Independent Auditors                                                                                                                                                                                                  |        |  | 45 | 

43