U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q

        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                 For the quarterly period ended August 31, 2004

       [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT

           For the transition period from _____________to____________

                        Commission File Number 000-21623

                             OBIE MEDIA CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         OREGON                                                  93-0966515
--------------------------------------------------------------------------------
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)


4211 West 11th Ave., Eugene, Oregon                  97402
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

               541-686-8400                      FAX 541-345-4339
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

Indicate by check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

 Yes  [ v ].   No  [   ].



Indicate by check mark whether the issuer is an accelerated filer as defined in
amended SEC Rule 12-b2.

Yes   [   ]     No [v ]



     As of October 1, 2004, 6,001,442 shares of the issuer's common stock were
outstanding.
<PAGE>
                             OBIE MEDIA CORPORATION
                                    FORM 10-Q
                                      INDEX
<TABLE>
<CAPTION>
PART I- FINANCIAL INFORMATION                                                                   Page
-----------------------------                                                                   ----
<S>                                                                                             <C>
ITEM 1.  Financial Statements

          Consolidated Condensed Balance Sheets as of  August 31, 2004 and November 30, 2003        2

          Consolidated Condensed Statements of Operations for the three month and nine month
                   periods ended August 31, 2004 and 2003                                           3

          Consolidated Condensed Statements of Cash Flows for the nine month
                  periods ended August 31, 2004 and 2003                                            4

         Notes to Consolidated Condensed Financial Statements                                       5

ITEM 2.  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                                            12

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk                                22

ITEM 4.  Controls and Procedures                                                                   22


PART II - OTHER INFORMATION

ITEM 4.  Submission of Matters to Vote of Security Holders                                         22

ITEM 6.  Exhibits and Reports on Form 8-K                                                          22

         Certifications                                                                            23
</TABLE>
<PAGE>
                                        OBIE MEDIA CORPORATION
                                 Consolidated Condensed Balance Sheets

                                                ASSETS
<TABLE>
<CAPTION>
                                                                         August 31,
                                                                           2004           November 30,
                                                                        (Unaudited)          2003
                                                                  --------------------------------------
<S>                                                                      <C>               <C>
CURRENT ASSETS:
   Cash                                                                  $  797,832        $  1,943,169
   Accounts receivable, net                                               5,493,288           5,774,226
   Prepaids and other current assets                                      6,208,542           5,099,504
   Deferred income taxes                                                  1,542,592           1,543,750
                                                                  --------------------------------------
        Total current assets                                             14,042,254          14,360,649

   Property and equipment, net                                           14,836,855          14,886,619
   Goodwill, net                                                          5,448,552           5,448,552
   Other assets                                                           1,571,677             749,936
                                                                  --------------------------------------
                                                                        $35,899,338       $  35,445,756
                                                                  ======================================


                                 LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current portion of long-term debt                                    $ 1,000,000        $  1,723,695
   Working capital revolver                                               4,935,214           3,890,483
   Accounts payable                                                         509,197             307,901
   Accrued transit fees                                                     973,096           1,148,124
   Accrued expenses                                                       1,164,969           1,220,754
   Income taxes payable                                                           -             214,540
   Unearned revenue                                                       1,083,821             928,051
                                                                  --------------------------------------
        Total current liabilities                                         9,666,297           9,433,548

Deferred tax liability                                                    1,584,805           1,586,631
Long-term debt, net                                                      18,550,670          17,246,748
                                                                  --------------------------------------
        Total liabilities                                                29,801,772          28,266,927
                                                                  --------------------------------------

Shareholders' equity:
   Preferred stock, without par value, 10,000,000 shares
    authorized, no shares issued or outstanding
   Common stock, without par value, 20,000,000 shares
    authorized, 6,001,442 and 5,913,602 shares issued
    and outstanding at August 31, 2004 and
   November 30, 2003, respectively                                       17,531,978          17,282,128
   Deferred stock based compensation                                      (146,523)                   -
   Other comprehensive loss                                                (87,892)            (45,495)
   Accumulated deficit                                                 (11,199,997)        (10,057,804)
                                                                  --------------------------------------
    Total shareholders' equity                                            6,097,566           7,178,829
                                                                  --------------------------------------
                                                                       $ 35,899,338        $ 35,445,756
                                                                  ======================================
See accompanying notes.
</TABLE>
                                       2
<PAGE>
                             OBIE MEDIA CORPORATION
                 Consolidated Condensed Statement of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                           Three Months Ended August           Nine Months Ended August
                                                            2004              2003              2004             2003
                                                      -----------------------------------------------------------------------
<S>                                                         <C>               <C>              <C>               <C>
REVENUES:
  Transit advertising                                       $11,016,302       $ 9,506,089      $28,830,135       $25,453,336
  Outdoor advertising                                         2,118,368         1,857,271        6,170,950         5,242,898
                                                      -----------------------------------------------------------------------
      Net revenue                                            13,134,670        11,363,360       35,001,085        30,696,234

OPERATING EXPENSES:
  Production and installation                                 1,783,684         1,470,753        4,996,602         4,392,478
  Transit and outdoor occupancy                               5,225,496         5,289,138       13,689,923        13,459,925
  Selling                                                     2,120,656         1,941,640        6,498,531         5,766,680
  General and administrative                                  2,275,588         1,930,299        6,569,310         5,449,891
  Depreciation and amortization                                 491,131           450,572        1,450,066         1,369,516
                                                      -----------------------------------------------------------------------
             Total operating expenses                        11,896,555        11,082,402       33,204,432        30,438,490

      Operating income                                        1,238,115           280,958        1,796,653           257,744

OTHER  EXPENSE:
  Interest expense                                              641,159           625,239        1,814,093         1,752,997
  Loss on debt extinguishment                                         -                 -          961,411                 -
                                                      -----------------------------------------------------------------------

INCOME (LOSS) FROM CONTINUING OPERATIONS
    BEFORE INCOME TAXES                                         596,956          (344,281)        (978,851)       (1,495,253)

INCOME TAX PROVISION (BENEFIT)                                   64,423           (25,431)         110,838           109,100


                                                      -----------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS                        532,533          (318,850)      (1,089,689)       (1,604,353)

DISCONTINUED OPERATIONS, NET OF INCOME TAXES                    (21,739)          (88,195)         (52,502)         (306,696)

                                                      -----------------------------------------------------------------------
          NET INCOME (LOSS)                                 $   510,794       $  (407,045)     $(1,142,191)     $ (1,911,049)
                                                      =======================================================================


Earnings (loss) per share:
    Basic and diluted, from continuing operations           $      0.09       $     (0.05)     $     (0.18)     $      (0.27)
    Basic and diluted, from discontinued operations                0.00             (0.02)           (0.01)            (0.05)
    Basic and diluted, on net earnings (loss)               $      0.09       $     (0.07)     $     (0.19)     $      (0.32)


See accompanying notes.
</TABLE>
                                       3
<PAGE>
                                         OBIE MEDIA CORPORATION
                             Consolidated Condensed Statement of Cash Flows
                                              (Unaudited)


                                                  Nine Months Ended August 31,
                                                                          -
                                                  2004              2003
                                                  -----------------------------

Cash Flows From Operating Activities:
   Net loss                                         (1,142,191)   $ (1,911,049)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
      Depreciation and amortization                  1,450,066       1,242,061
      Loss on debt extinguishment                      961,411               -
      Compensation expense from restricted stock        65,781               -
      Changes in assets and liabilities:
         (Increase) decrease in:
             Accounts receivable                       280,938       1,960,681
             Prepaid and other assets               (1,145,861)       (618,688)
             Deferred income taxes                       1,158               -
         Increase (decrease) in:
             Accounts payable                          201,296         (62,485)
             Other liabilities                        (253,865)       (442,820)
                                                  -------------   -------------
        Net cash used in operating activities          418,733         167,700
                                                  -------------   -------------

Cash Flows From Investing Activities:
    Capital expenditures                            (1,195,382)       (413,725)
                                                  -------------   -------------
        Net cash used in investing activities       (1,195,382)       (413,725)
                                                  -------------   -------------



Cash Flows From Financing Activities:
   Net borrowings on line of credit                  1,044,731         810,000
   Borrowings of long-term debt                     20,215,535          92,679
   Payments on long-term debt                      (20,345,125)     (1,480,555)
   Loan fees incurred with financing                (1,241,432)              -
                                                  -----------------------------
        Net cash used in financing activities         (326,291)       (577,876)
                                                  -----------------------------

Effect of exchange rate changes on cash                (42,397)       (51,915)

Net decrease in cash                                (1,145,337)       (875,816)
Cash, beginning of period                            1,943,169       1,815,886
                                                  -----------------------------
Cash, end of period                                  $ 797,832       $ 940,070
                                                  =============================

See accompanying notes.

                                       4
<PAGE>
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


1.       BASIS OF PRESENTATION

         The interim financial statements have been prepared by Obie Media
Corporation ("Obie", "Obie Media" or the "Company") without audit. In the
opinion of management, the accompanying unaudited financial statements contain
all adjustments necessary to present fairly the financial position of the
Company as of August 31, 2004 and November 30, 2003, and the results of
operations and cash flows of the Company for the three and nine months ended
August 31, 2004 and 2003, as applicable. The condensed consolidated financial
statements include the accounts of the Company and its subsidiaries, and all
significant intercompany accounts and transactions have been eliminated in
consolidation.

         Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted as permitted by rules and regulations
of the Securities and Exchange Commission. The organization and business of the
Company, accounting policies followed by the Company and other information are
contained in the notes to the Company's financial statements filed as part of
the Company's November 30, 2003 Form 10-K. This quarterly report should be read
in conjunction with such annual report.


2.          STOCK OPTIONS


STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS NO. 123 AND NO. 148
..

         The Company measures compensation expense for its stock-based employee
compensation plans using the intrinsic value method under Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees " , (APB 25),
and provides pro forma disclosures of net income (loss) and net income (loss)
per common share as if the fair value method had been applied in measuring
compensation expense in accordance with Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", (SFAS No. 123).


         In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, (SFAS No. 148), "Accounting for Stock-Based Compensation -
Transition and Disclosure - an amendment of FAS 123." SFAS No. 148 amends SFAS
No. 123 to provide alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee compensation.
In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results.
Finally, SFAS No.148 amends APB Opinion No. 28 ("APB 28"), "Interim Financial
Reporting," to require disclosure about those effects in interim financial
information. The amendments to the transition and disclosure provisions is
effective for fiscal years ending after December 15, 2002. The amendment to APB
28 is effective for financial reports containing condensed financial statements
for interim periods beginning after December 15, 2002. We adopted the disclosure
provisions of SFAS No. 148 during our quarter ended May 31, 2003.


         As required by SFAS No. 123, the Company computed the value of options
granted during the three and nine month periods ended August 31, 2004 and 2003
using the Black-Scholes option pricing model for pro forma disclosure purposes.
The weighted average assumptions used for stock option grants for the three and
nine month periods ended August 31, 2004 and 2003 were a risk-free interest rate
of 3.46% and 4.9%, respectively, expected dividend yields of 0%, expected lives
of 6.0 years and expected volatility of 79.76% and 81.48%, respectively.

         Options are assumed to be exercised upon vesting for purposes of this
valuation. Adjustments are made for options forfeited as they occur. For the
three month periods ended August 31, 2004 and 2003, the total value of the
options granted was approximately $7,100 and $7,200, respectively. For the nine
month periods ended August 31, 2004 and 2003 the total value of options granted
was

                                       5
<PAGE>
approximately $139,000 and $20,600 respectively. The value would be amortized on
a straight-line basis over the vesting periods of the options.

         Had Obie accounted for these plans in accordance with SFAS No. 123, the
Company`s net income (loss) and pro forma net income (loss) per share would have
been reported as follows:

                          THREE MONTHS ENDED AUGUST 31,
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                                   2004               2003
                                                                                   ----               ----
<S>                                                                               <C>             <C>
      Net income (loss) as reported                                                 $511            $(407)

      Deduct total stock-based compensation expense determined under
      fair value based method for all awards, net of related tax effects             (40)             (53)

                                                                             ------------------ -----------------
      Pro-forma net income (loss)                                                   $471            $(460)
                                                                             ================== =================

      Net income (loss) per Share
      Basic:
      As reported                                                                                   $(0.07)
                                                                                   $0.09
      Pro forma                                                                                     $(0.08)
                                                                                   $0.08
      Fully diluted:
      As reported                                                                                   $(0.07)
                                                                                   $0.09
      Pro forma                                                                                     $(0.08)
                                                                                   $0.08
</TABLE>
<TABLE>
<CAPTION>
                          NINE MONTHS ENDED AUGUST 31,
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                                   2004               2003
                                                                                   ----               ----
<S>                                                                            <C>               <C>
      Net loss as reported                                                       $(1,142)          $(1,911)


      Deduct total stock-based compensation expense determined under fair
      value based method for all awards, net of related tax effects                 (120)             (160)

                                                                             ------------------ -----------------
      Pro-forma net loss                                                         $(1,262)          $(2,071)
                                                                             ================== =================

      Net loss per Share

      Basic:
      As reported                                                                 $(0.19)           $(0.32)
      Pro forma                                                                   $(0.21)           $(0.35)
      Fully diluted:
      As reported                                                                 $(0.19)           $(0.32)
      Pro forma                                                                   $(0.21)           $(0.35)
</TABLE>

         The effects of applying SFAS No. 123 for providing pro forma disclosure
for the three and nine month periods ended August 31, 2004 and 2003 are not
likely to be representative of the effects on reported net income (loss) and net
income (loss) per share for future years since options vest over several years
and additional awards are made each year.

                                       6
<PAGE>
         The Company entered into restricted stock agreements with eight
executives in November 2003 and February 2004 in exchange for certain of their
stock options. The restricted stock agreements were approved by the Company's
board of directors. Under the terms of the agreements, 87,945 shares of
restricted stock were exchanged for 175,890 stock options. 71,508 shares vest
over three and one-half years and 16,437 shares vest over five years. The fair
value of the restricted stock on the date of grants amounted to $247,184, of
which $65,781 was recorded as compensation expense during the nine months ended
August 31, 2004. Unamortized compensation expense at August 31, 2004 totaled
$146,523 and has been recorded as Deferred Stock Based Compensation in the
balance sheet. The restricted stock shares were issued in December 2003 and June
2004.


3.           CONTRACT TERMINATION

         On December 5, 2001 the Company received notice from the Chicago
Transit Authority (CTA) that it was terminating the Company's transit
advertising agreement effective as of that date. The parties entered into a
settlement agreement effective May 28, 2002 with respect to outstanding issues.

         The settlement agreement required the Company to pay the CTA
approximately $17 million, substantially less than the original contracted
guaranteed payment of $21.8 million. This obligation was paid in full in January
2004 from funds provided by new financing arrangements described in Note 4
below.


4.       DEBT AGREEMENTS

         On January 14, 2004 the Company entered into a new long-term financing
agreement with CapitalSource Finance, LLC. The agreement includes a $17.5
million term loan and a $6.0 million revolving line of credit to Obie Media
Corporation. Both obligations mature on November 30, 2008. The agreement
includes a $2.5 million term loan to Obie Media Ltd., the Company's Canadian
subsidiary which expires on January 31, 2009. Funds from the term loans were
used to (1) pay off the existing term loan with U.S. Bank, (2) pay off the
balance of the settlement obligation with the Chicago Transit Authority, and (3)
pay off the promissory note related to the purchase of the minority interest of
O.B. Walls, Inc. Funds from the revolving line of credit were used to pay off
the outstanding balance on the operating line of credit due to U.S. Bank. The
interest charged is prime plus 4.5% on the revolving line of credit and prime
plus 5.5% on the term loans. These margins may be reduced by up to 1.0%
depending on the Company's leverage ratio. The effective rates on the revolving
line of credit and term loans at August 31, 2004 were 9.0% and 10.0%,
respectively. The first date the margins may be adjusted is the quarter ending
November 30, 2004. This transaction resulted in a write off of the discount on
the obligation with the Chicago Transit Authority in the amount of $709,817, and
write off of prepaid loan costs in the amount of $251,594. These amounts have
been shown as loss on debt extinguishment in the Consolidated Statement of
Operations.

         The loan agreement with CapitalSource Finance LLC contains financial
covenants regarding (1) minimum rolling EBITDA, (2) maximum leverage ratios, (3)
fixed-charge coverage ratios, and (4) interest coverage ratios, all of which are
measured on a quarterly basis. The first measurement date was as of February 29,
2004. The loan agreement also restricts the Company's ability to pay dividends.
The loans are collateralized by substantially all of the assets of the Company.
The Company was in compliance with all covenants at August 31, 2004.

                                       7
<PAGE>
         The Company has an arrangement with Travelers Casualty & Surety Company
of America ("Travelers"), to provide bonds required by the Company. The Company
and Travelers have entered into a security agreement whereby Travelers maintains
a second position security interest in certain of the Company's assets,
subordinate to the security arrangements with CapitalSource Finance LLC or any
other replacement primary lender.


5.       ACCOUNTING FOR GOODWILL

         In accordance with Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets", (SFAS No. 142), goodwill amortization
was discontinued as of November 30, 2002. We continued our impairment analysis
during the quarter ending August 31, 2004 and have found no instances of
impairment. Goodwill at August 31, 2004 and November 30, 2003 amounted to
$5,448,552, net of accumulated amortization of $2,181,571.


6.       INCOME TAXES

         The provision for (benefit from) income taxes for the nine months ended
August 31, 2004 and 2003 differs from the amounts computed by applying the U.S.
federal income tax rate of 34 percent to pretax income as follows:

                                                    Nine Months ended August 31,
                                                    --------          --------
                                                      2004               2003
                                                    --------          --------

Statutory federal income tax rate                    (34.0%)           (34.0%)
Increase in income taxes resulting from:
     State and local taxes, net of federal benefit    (3.6%)            (3.6%)
     Net operating loss valuation allowance           37.6%             37.6%
     Foreign income taxes                             11.3%              7.3%

                                                    --------          --------
Effective income tax rate                             11.3%              7.3%
                                                    ========          ========


7.       EARNINGS PER SHARE

         Basic earnings per share (EPS) is calculated using the weighted average
number of common shares outstanding for the period and diluted EPS is calculated
using the weighted average number of common shares and dilutive common
equivalent shares outstanding. The following is a reconciliation of the basic
and diluted shares used in the per share calculation:

                                                          Three Months Ended
                                                              August 31,
                                                         2004            2003
                                                         ----            ----

             Basic Shares (weighted average)          6,000,464       5,908,577
             Dilutive effect of stock options            41,054               -

                                                     ----------      ----------
             Diluted shares (weighted average)        6,041,518       5,908,577
                                                     ==========      ==========

                                       8
<PAGE>
                                                           Nine Months Ended
                                                              August 31,
                                                         2004            2003
                                                         ----            ----

             Basic Shares (weighted average)          5,989,180       5,908,577
             Dilutive effect of stock options            18,506               -

                                                     ----------      ----------
             Diluted shares (weighted average)        6,007,686       5,908,577
                                                     ==========      ==========

         At August 31, 2004 and 2003 options to acquire 521,990 and 654,908
shares, respectively, of the Company's common stock were outstanding.


8.       COMPREHENSIVE INCOME

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" (SFAS
No. 130). This statement establishes standards for reporting and displaying
comprehensive income and its components in a full set of general-purpose
financial statements. The objective of SFAS No. 130 is to report a measure of
all changes in equity of an enterprise that result from transactions and other
economic events of the period other than transactions with owners. Comprehensive
income did not materially differ from reported net income (loss) for the nine
month periods ended August 31, 2004 and 2003 respectively.


9.       DISCONTINUED OPERATIONS

         Effective during its fiscal year ended November 30, 2002, the Company
adopted Statements of Financial Accounting Standards No. 144 "Accounting for the
Impairment of Long-Lived Assets" (SFAS No. 144) and No. 146 "Accounting for
Costs Associated with Exit or Disposal Activities" (SFAS No. 146).

         Pursuant to these pronouncements, the Company has classified as
"Discontinued Operations" the results of operations and any exit costs
associated with transit agreements that were (a) economically not viable - and
(b) where the Company plans to or has already either exited the market or
intends not to be a competitive participant in new contract awards for expiring
agreements. Accordingly, the Company exited these markets and has no ongoing
advertising operations. These operations qualify as components of an entity with
separate financial reporting as described in SFAS No. 144. The assets associated
with the discontinued markets are, in the aggregate, not material. For fiscal
2004, the U.S. transit districts included in Discontinued Operations are San
Antonio, Pittsburgh and Bridgeport. For fiscal 2003 the U.S. transit districts
included in Discontinued Operations are: Chicago, San Antonio, Cincinnati,
Kitsap, Santa Cruz and Bridgeport, and the Canadian transit districts included
are: Pickering, Whitby, Cambridge and St. Catharines. The Chicago (see Note 3
above), Pickering, Whitby, Cambridge and St. Catharines contracts were
terminated during fiscal year 2002 - and the contract in San Antonio was
terminated in December 2002. The Company did not aggressively participate in new
contract awards in Cincinnati, Kitsap, Santa Cruz or Bridgeport, which contracts
expired either during fiscal 2002 or early in fiscal 2003. The results of
operations for these transit districts for 2003 have been reclassified to
Discontinued Operations for comparability purposes.

                                       9
<PAGE>
         Net revenues and the components of the net loss related to the
discontinued operations were as follows:
<TABLE>
<CAPTION>
                                                               Three months ended August 31,
                                                                2004                  2003
                                                                ----                  ----
<S>                                                           <C>                   <C>
      Net revenues                                            $    108              $ 10,491

      Production and installation expenses                                            (4,228)
      Occupancy expense                                        (22,659)              (29,009)
      Sales expense                                              4,000                  (922)
      General and administrative expense                        (3,188)              (64,527)
                                                             ----------            ----------
      Loss from discontinued operations before income taxes    (21,739)              (88,195)
      Income tax expense                                             -                     -
      Net loss from discontinued operations                   $(21,739)             $(88,195)
                                                             ==========            ==========

                                                             Nine months ended August 31,
                                                                2004                  2003
                                                                ----                  ----

      Net revenues                                            $ (5,805)             $258,308

      Production and installation expenses                      (5,643)              (53,350)
      Occupancy expense                                        (26,596)             (168,710)
      Sales expense                                              1,208               (53,576)
      General and administrative expense                       (15,666)             (289,368)
                                                             ----------            ----------
      Loss from discontinued operations before income taxes    (52,502)             (306,696)
      Income tax expense                                             -                     -
                                                             ----------            ----------
      Net loss from discontinued operations                  $ (52,502)            $(306,696)
                                                             ==========            ==========
</TABLE>

10.       NEW ACCOUNTING PRONOUNCEMENTS

         In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others". FIN 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements regarding its obligations under certain of its guarantees. FIN 45
also requires a guarantor to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. The initial recognition and measurement provisions of this
interpretation are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002, while the provisions of the disclosure
requirements are effective for the financial statements of interim or annual
reports ending after December 15, 2002. The Company has adopted the requirements
of FIN 45. The adoption of FIN 45 did not have a material effect on the
Company's financial position or results of operations.


                                       10
<PAGE>
11.      RECLASSIFICATIONS

         Certain amounts previously reported in the Company's financial
statements as of August 31, 2003 have been reclassified to conform to the
current fiscal year presentation. These reclassifications had no effect on
previously reported net income (loss) or shareholders' equity.


12.  CONTINGENCIES

         From time to time the Company is subject to legal proceedings and
claims in the ordinary course of business. The Company is currently involved in
claims and legal proceedings in which monetary damages and other relief are
sought. The Company is vigorously contesting these claims. Resolution, however,
is not expected to occur quickly, and the ultimate outcome cannot presently be
predicted. In the opinion of the Company's management, the ultimate resolution
of these claims and proceedings will not likely to have a material adverse
effect on the consolidated financial condition, results of operations or cash
flows of the Company.

         The Company also is party to a suit in the District Court of Bexar
County, Texas brought by VIA Metropolitan Transit (VIA), the transit authority
for San Antonio, Texas. The suit alleges breach of contract, fraud and theft
relative to a contract for transit advertising services between the Company and
VIA. Damages have been claimed to be in excess of $600,000. The Company believes
these claims are without merit and is vigorously contesting them; however, their
ultimate outcome cannot presently be predicted. Trial of this action is
currently scheduled for February 2005.


13.      SUBSEQUENT EVENT

            On September, 17, 2004, Obie entered into a definitive agreement to
be merged with Lamar Advertising Company. Under the terms of the agreement Lamar
will acquire all of Obie's outstanding stock for approximately $43 million or
approximately $7.00 per share of Obie common stock. Lamar expects to issue an
aggregate of approximately 1.0 million shares of Lamar Class A common stock in
the merger. The exact exchange ratio is to be based upon the average closing
price of Lamar stock for the twenty trading days three days prior to closing.
Closing is expected to occur on or about January 15, 2005.

         In conjunction with executing the above agreement, the Company's board
of directors accelerated vesting on all outstanding stock options, and effective
September 30, 2004, terminated the Company's employee stock purchase plan.

















                                       11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

FORWARD-LOOKING STATEMENTS
--------------------------

         The following discussion includes certain forward-looking statements
that involve a number of risks and uncertainties. Obie's actual results could
differ materially from the forward-looking statements. Factors that could cause
or contribute to such differences include: failure to conclude favorable
negotiations on pending transactions with existing transit agency partners or to
successfully assimilate expanded operations; potential impairments of liquidity
or capital resources; inability to generate sufficient advertising revenues to
meet contractual guarantees; inability to renew existing lending arrangements as
they expire; potential for cancellation or interruption of contracts with
governmental agencies; a further decline in the demand for advertising in the
areas where we conduct our business, or a deterioration of business conditions
generally in those areas; slower than expected acceptance of our innovative
display products; competitive factors, including increased competition and price
pressures; changes in the seasonality of our business; and changes in regulatory
or other external factors; as well as those factors listed from time to time in
Obie's SEC reports, including, but not limited to, the factors discussed in this
quarterly report. You should recognize that these forward-looking statements,
which speak only as of the date of this quarterly report, reflect management's
expectations based on information available as of that date; you should not
construe our forward-looking statements as assurances of future performance. We
do not intend to update our forward-looking statements except as required by
law.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Our discussion and analysis of our financial condition and results of
operations following are based upon our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires us to make estimates and judgements that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities.

         We believe that the estimates, assumptions and judgements involved in
the accounting policies described below have the greatest potential impact on
our financial statements, so we consider these to be our critical accounting
policies. Because of the uncertainty inherent in these matters, actual results
could differ from the estimates we use in applying the critical accounting
policies. Certain of these critical accounting policies affect working capital
account balances, including the reserve for uncollectible accounts receivable
and deferred income taxes. These policies require that we make estimates in the
preparation of our financial statements as of a given date. However, since our
business cycle is relatively short, actual results related to the estimates
relative to uncollectible accounts receivable are generally known within the six
month period following the financial statement date. Thus, these policies
generally affect only the timing of reported amounts across two to three
quarters. The estimate of deferred tax assets may affect reported amounts beyond
that time period.

         Within the context of these critical accounting policies, we are not
currently aware of any reasonably likely events or circumstances which would
result in materially different amounts being reported.

                                       12
<PAGE>
RECOGNITION OF REVENUE

         Revenue from advertising contracts is recognized ratably over the
contract term, and the estimated cost components of a contract (cost of the
advertising space and the costs of producing and installing advertising copy)
are deferred and matched against the periodic recognition of revenue on
essentially a straight-line basis. This method also necessitates the recognition
of an unearned revenue liability for billings to customers for time periods
beyond the end of the current accounting cycle.

DISCONTINUED OPERATIONS

         Effective during its fiscal year ending November 30, 2002, the Company
adopted Statements of Financial Accounting Standards No. 144 "Accounting for the
Impairment of Long-Lived Assets" (SFAS No. 144) and No. 146 "Accounting for
Costs Associated with Exit or Disposal Activities", (SFAS No. 146).

         Pursuant to these pronouncements, the Company has classified as "
Discontinued Operations" the results of operations and any exit costs associated
with transit district contracts that were exited. As a result the Company has no
further involvement with these markets. For fiscal 2004, the transit districts
included in Discontinued Operations are San Antonio, Pittsburgh and Bridgeport.
For fiscal 2003 the U.S. transit districts included in Discontinued Operations
are: Chicago, San Antonio, Cincinnati, Kitsap, Santa Cruz and Bridgeport, and
the Canadian transit districts included are: Pickering, Whitby, Cambridge and
St. Catharines.

ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE

         We make ongoing estimates relating to the collectiblity of our accounts
receivable and maintain a reserve for estimated losses resulting from the
inability of our customers to make required payments. In determining the amount
of the reserve, we consider our historical level of credit losses, the aging
spread of accounts at the date the estimate is made, trends in the overall media
economy, and general business conditions. Since we cannot predict future changes
in the financial stability of our customers, actual future losses from
uncollectible accounts may differ from our estimates. If the financial condition
of our customers were to deteriorate, resulting in their inability to make
payments, a larger reserve might be required. In the event that a smaller or
larger reserve was appropriate, we would record a credit or charge to
administrative expense in the period in which we made such a determination.

INCOME TAXES

         We record valuation allowances against our deferred tax assets, when
necessary, in accordance with SFAS No. 109, "Accounting for Income Taxes."
Realization of deferred tax assets (such as net operating loss carryforwards) is
dependent on future taxable earnings and therefore is uncertain. We asses the
likelihood that our deferred tax asset balance will be recovered from future
taxable income on a quarterly basis. To the extent that we believe recovery is
unlikely, we establish a valuation allowance against our deferred tax assets
increasing our income tax expense in the period such determination is made. An
increase in the valuation allowance would result in a charge to income tax
expense. A decrease in the valuation allowance would result in a reduction to
income tax expense.

         On an interim basis, we estimate what our effective tax rate will be
for the full fiscal year and record a quarterly income tax provision in
accordance with the anticipated annual rate. As the fiscal year progresses we
continually refine our estimate based upon actual events and earnings during the



                                       13
<PAGE>
year. This continual estimation process periodically results in a change to our
expected tax rate for the fiscal year. When this occurs, we adjust the income
tax provision during the quarter in which the change in estimate occurs so that
the year-to-date provision is in accordance with the annual anticipated rate.

PROPERTY, PLANT AND EQUIPMENT AND OTHER LONG-LIVED ASSETS

         Property, plant and equipment, including buildings, equipment, and
computer hardware and software is recorded at cost (including, in some cases,
the cost of internal labor) and is depreciated over estimated useful lives.
Changes in circumstances (such as technological advances or changes to our
business operations) can result in differences between the actual and estimated
useful lives. In those cases where we determine that the useful life of a
long-lived asset should be shortened, we increase depreciation expense over the
remaining estimated useful life to depreciate the asset to its salvage value.

         In accordance with Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets, (SFAS No. 142), goodwill amortization was
discontinued as of November 30, 2002. We conducted an impairment analysis as of
November 30, 2003 and found no instances of impairment. Goodwill at August 31,
2004 and November 30, 2003 amounted to $5,448,552, net of accumulated
amortization of $2,181,571.

OTHER CONTINGENCIES

         In the ordinary course of business, we are involved in legal
proceedings involving contractual, employment relationships and a variety of
other matters. We record contingent liabilities resulting from claims against us
when it is probable that a liability has been incurred and the amount of the
loss is reasonably estimable. We disclose contingent liabilities when there is a
reasonable possibility that the ultimate loss will exceed the recorded
liability. Estimating probable losses requires analysis of multiple factors, in
some cases including judgements about the potential actions of third party
claimants and courts. Therefore, actual losses in any future period are
inherently uncertain. However, if actual or estimated probable future losses
exceed our recorded liability for such claims, we would record additional
charges as other expense during the period in which the actual loss or change in
estimate occurred.

         From time to time the Company is subject to legal proceedings and
claims in the ordinary course of business. The Company is currently involved in
claims and legal proceedings in which monetary damages and other relief are
sought. The Company is vigorously contesting these claims; however, resolution
is not expected to occur quickly, and their ultimate outcome cannot presently be
predicted. In the opinion of the Company's management, the ultimate resolution
of these claims and proceedings will not likely have a material adverse effect
on the consolidated financial condition, results of operations or cash flows of
the Company.

         The Company also is party to a suit in the District Court of Bexar
County, Texas brought by VIA Metropolitan Transit (VIA), the transit authority
for San Antonio, Texas. The suit alleges breach of contract, fraud and theft
relative to a contract for transit advertising services between the Company and
VIA. Damages have been claimed to be in excess of $600,000. The Company believes
these claims are without merit and is vigorously contesting them; however, their
ultimate outcome cannot presently be predicted. Trial is presently scheduled in
this action for February 2005.


                                       14
<PAGE>
RECENT DEVELOPMENTS

         On September 17, 2004 the Company entered into a definitive agreement
to be merged with Lamar Advertising Company. Under the terms of the agreement
Lamar will acquire all of Obie's outstanding stock for approximately $43
million, or approximately $7.00 per share of Obie common stock. Lamar expects to
issue an aggregate of approximately 1.0 million shares of Lamar Class A common
stock in the merger, the exact exchange ratio to be based upon the average
closing price of Lamar stock for the twenty trading days three days prior to
closing. Closing is expected to occur on or about January 15, 2005.

         In conjunction with executing the above agreement, the Company's board
of directors accelerated vesting on all outstanding stock options, and effective
September 30, 2004, terminated the Company's employee stock purchase plan.

         On January 14, 2004 Obie entered into a new long-term financing
arrangement with CapitalSource Finance LLC. The agreement includes a $17.5
million term loan and a $6.0 million revolving line of credit with Obie Media
Corporation, both of which mature on November 30, 2008. The agreement also
includes a $2.5 million term loan to Obie Media Ltd., our wholly owned Canadian
subsidiary, which matures on January 31, 2009. The interest rates are prime plus
4.5% on the revolving line of credit and prime plus 5.5% on the term loans,
respectively. These margins may be reduced by up to 1.0% depending on the
Company's leverage ratio. The effective rates on the revolving line of credit
and term loans at August 31, 2004 were 9.0% and 10.0%, respectively. The first
date the margins may be adjusted is the quarter ending November 30, 2004.

         Funds from the term loan were used to (1) pay off the existing term
loan with the previous lender, (2) pay off the balance of the settlement
obligation with the Chicago Transit Authority, and (3) pay off the promissory
note related to the purchase of the minority interest of O. B. Walls, Inc. in
fiscal 2002. Funds from the new revolving line of credit were used to pay off
the existing revolving line of credit with the previous lender and to fund
closing costs and working capital needs. Approximately $1.1 million is available
for future borrowings under the revolving line of credit as of August 31, 2004.
The term loan principal payment amounts are $1.0 million in fiscal 2004, $1.0
million in fiscal 2005, $2.0 million in fiscal 2006, $3.0 million in fiscal
2007, $11.1 million in fiscal 2008, with the balance due at maturity. The
revolving line of credit balance is due in full at maturity.

         The loan agreement with CapitalSource Finance, LLC contains financial
covenants regarding (1) minimum rolling EBITDA, (2) maximum leverage ratios, (3)
fixed-charge coverage ratios, and (4) interest coverage ratios, all of which are
measured on a quarterly basis. The Company was in compliance with all covenants
as of August 31, 2004. The loan agreement also restricts the Company's ability
to pay dividends. The loans are collateralized by substantially all of the
assets of the Company.


COMPARISON OF THE THREE MONTHS ENDED AUGUST 2004 AND 2003

RESULTS OF CONTINUING OPERATIONS

         REVENUES. Our revenues are derived from providing advertising space on
out-of-home advertising displays, primarily on transit vehicles under transit
district agreements and on outdoor advertising displays we own or operate.
Revenues are also derived from the sale of design and installation services and
the production of advertising display content. Net revenues for the three months
ended August 31, 2004 increased $1.8 million, or 15.6%, to $13.1 million from
$11.4 million for the same period in fiscal 2003. Transit net revenues increased
$1.5



                                       15
<PAGE>
million, or 15.9%, to $11.0 million for the three months ended August 31, 2004
from $9.5 million for the same period of fiscal 2003. The increase reflects our
continuing success in selling annual, production included transit advertising
contracts to our customers. Outdoor net revenues increased $261,000, or 14.1% to
$2.1 million for the three months ended August 31,2004 compared to $1.9 million
for the same period of fiscal 2003. The increase was due primarily to higher
occupancy (sell-out) rates of the billboard plant.

PRODUCTION AND INSTALLATION EXPENSES. These expenses relate primarily to the
production of transit advertising content and the installation of the content on
transit vehicles, benches and shelters. Also included is the cost of billboard
content and installation. Production and installation expenses increased
$313,000, or 21.3%, to $1.8 million for the three months ended August 31, 2004
from $1.5 million in fiscal 2003. The Company's production and installation
activities are primarily related to the transit advertising part of our
business, and were approximately 16.2% of net transit revenues for the three
months ended August 31, 2004 as compared to 15.5% of transit net revenues for
the same period of fiscal 2003. The increase is primarily due to the fact that
the Company has sold this year, when compared to a year ago, a higher portion of
long-term versus short-term business which has a higher production cost
component.

TRANSIT AND OUTDOOR OCCUPANCY EXPENSES. These expenses include fees paid to
transit authorities and lease payments to landowners for billboard sites. Under
our transit agreements, we typically guarantee to pay the transit district the
greater of a minimum stated amount or a percentage of the advertising revenues
generated by our use of the district's vehicles. Occupancy expense for outdoor
structures includes the cost of illuminating outdoor displays and property taxes
on the outdoor advertising structures. Transit and outdoor occupancy expenses
decreased approximately $64,000, or 1.2%, to $5.2 million for the three months
ended August 31, 2004 compared to $5.3 million in the same period of fiscal
2003. The slight decrease was related primarily to lower minimum guarantees in
transit contracts that were renewed during 2004.  These expenses, as a
percentage of net revenues, decreased to 39.8% in the three months ended August
31, 2004 compared to 46.5% of net revenues in the same period of fiscal 2003.
The decrease in the ratio was primarily due to reduced guaranteed payments on
transit contracts.

SELLING EXPENSES. Sales expenses consist primarily of employment and
administrative expenses associated with our sales force. These expenses
increased $179,000, or 9.2%, to $2.1 million for the three months ended August
31, 2004 compared to $1.9 million in the same period in fiscal 2003 due to
increased sales. However, selling expenses, as a percentage of net revenues,
dropped to 16.1% for the three months ended August 31, 2004 compared to 17.1% in
the same period in fiscal 2003. The decrease was primarily related to cost
containment elements of our sales incentive compensation programs.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses include
costs related to individual markets, as well as corporate expenses. Expenses
related to individual markets include expenses for the personnel and facilities
required to administer that market and neighboring markets. Corporate general
and administrative expenses represent personnel and facilities costs for Obie
Media's executive offices and centralized staff functions which include
accounting, marketing, human resources and technology management.

General and administrative expenses increased $345,289, or 17.9% to $2.3 million
for the three months ended August 31, 2004 as compared to $1.9 million in the
same period of fiscal 2003. The increase was related primarily to (1) additional
costs in the corporate marketing department in support of the annual incentive
contract sales mentioned above ($190,000) and (2) an increase in legal fees
incurred in connection with the defense of the VIA lawsuit ($175,000).

                                       16
<PAGE>
DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization expenses
increased $41,000, or 9.0 %, to $491,000 in the three months ended August 31,
2004 compared to $451,000 for the same period in fiscal 2003. The increase was
due to increased loan cost amortization expense relative to the new financing
arrangements consummated in January 2004.

OPERATING INCOME. Due to the events and factors discussed above we generated
operating income of $1.2 million in the three months ended August 31, 2004
compared to operating income of $281,000 in the same period of fiscal 2003.

INTEREST EXPENSE. Interest expense increased $16,000, or 2.5%, to $641,000 for
the three months ended August 31, 2004 compared to $625,000 for the comparable
period of fiscal 2003. The increase was due primarily to increased interest
rates on the Company's new financing arrangements with CapitalSource Finance,
LLC.

PROVISION FOR INCOME TAXES. The Company accounted for all available loss
carryback refunds in the fiscal 2001 provision for income taxes. The Company has
substantial loss carryforwards, against which valuation allowances have been
provided. Since the operating loss carryforwards expire at certain times, we
have evaluated the likeliness of utilizing those carryforwards against future
taxable income in such time frames and have established a valuation allowance
accordingly. The current provision for income taxes, both for the 2004 and 2003
fiscal periods, is comprised of Canadian income taxes of one of our subsidiaries
that also operates in Canada.

INCOME (LOSS) FROM CONTINUING OPERATIONS. Due to the items and factors discussed
above we generated income from continuing operations of $597,000 in the three
months ended August 31, 2004 compared to an operating loss of $344,000 for the
same period in fiscal 2003.

RESULTS OF DISCONTINUED OPERATIONS

Most transit arrangements include a provision that a certain percentage of net
revenues be shared with the transit authorities (transit fees) on a revenue
sharing basis (a certain percentage to the transit authority, the balance
retained by Obie), but often with minimum payment requirements. Agreements that
contain large minimum transit fee payment guarantees, relative to market size,
significantly hinder our ability to manage our operating expenses in weak
economic environments. These high minimum payment requirements have prompted the
Company to negotiate modifications to such contracts, negotiate or effect early
terminations to such contracts, or exit such markets at the end of the contract
term.

As discussed above, discontinued operations contain the operating results, net
of income taxes, for transit markets from which we have exited. The discontinued
operations for the three months ended August 31, 2004 include the operations of
San Antonio, Pittsburgh and Bridgeport. For the same period of fiscal 2003
discontinued operations include the operations of Chicago, San Antonio, Texas;
Cincinnati; Kitsap, Washington; Santa Cruz, California; Bridgeport, Connecticut;
and the Ontario, Canada markets of Pickering, Whitby, Cambridge and St.
Catharines.

NET INCOME (LOSS)

Due to the items and factors discussed above, Obie realized net income of
$511,000 during the three months ended August 31, 2004, compared to a net loss
of $407,000 in the same period of fiscal 2003.


                                       17
<PAGE>
COMPARISON OF THE NINE MONTHS ENDED AUGUST 31, 2004 AND 2003

RESULTS OF CONTINUING OPERATIONS

REVENUES. Our revenues are derived from providing advertising space on
out-of-home advertising displays, primarily on transit vehicles under transit
district agreements and on outdoor advertising displays we own or operate.
Revenues are also derived from the sale of design and installation services and
the production of advertising display content. Net revenues for the nine months
ended August 31, 2004 increased $4.3 million, or 14.0%, to $35.0 million from
$30.7 million for the same period in fiscal 2003. Transit net revenues increased
$3.4 million, or 13.3%, to $28.8 million for the nine months ended August 31,
2004 compared to $25.5 million for the same period of fiscal 2003. The increase
reflects our continuing success in selling annual, production included transit
advertising contracts to our customers. Outdoor net revenues increased $928,000,
or 17.7% to $6.2 million for the nine months ended August 31, 2004 compared to
$5.2 million for the same period of fiscal 2003. The increase was due primarily
to higher occupancy (sell-out) rates of the billboard plant.

PRODUCTION AND INSTALLATION EXPENSES. These expenses relate primarily to the
production of transit advertising content and the installation of the content on
transit vehicles, benches and shelters. Also included is the cost of billboard
content and installation. Production and installation expenses increased
$604,000, or 13.8%, to $5.0 million for the nine months ended August 31, 2004
compared to $4.4 million in fiscal 2003. The Company's production and
installation activities are primarily related to the transit advertising part of
our business, and were approximately 17.3% of net transit revenues for the nine
month periods of both years.

TRANSIT AND OUTDOOR OCCUPANCY EXPENSES. These expenses include fees paid to
transit authorities and lease payments to landowners for billboard sites. Under
our transit agreements, we typically guarantee to pay the transit district the
greater of a minimum stated amount or a percentage of the advertising revenues
generated by our use of the district's vehicles. Occupancy expense for outdoor
structures includes the cost of illuminating outdoor displays and property taxes
on the outdoor advertising structures. Transit and outdoor occupancy expenses
increased approximately $230,000, or 1.7%, to $13.7 million for the nine months
ended August 31, 2004 compared to $13.5 million in the same period of fiscal
2003. The increase was related primarily to increased land lease expenses for
billboard sites ($163,000). These expenses, as a percentage of net revenues,
decreased to 39.1% in the nine month period ended August 31, 2004 compared to
43.8% of net revenues in the same period of fiscal 2003. The decrease in the
ratio is primarily due to reduced guaranteed payments on transit contracts.

 SELLING EXPENSES. Sales expenses consist primarily of employment and
administrative expenses associated with our sales force. These expenses
increased $732,000, or 12.7%, to $6.5 million for the nine months ended August
31, 2004 compared to $5.8 million in the same period in fiscal 2003. Selling
expenses, as a percentage of net revenues, decreased to 18.6% for the nine
months ended August 31, 2004 compared to 18.8% in the same period in fiscal
2003. The decrease was primarily due to variable sales costs (sales commissions
and incentives) that fluctuate with sales volume.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses include
costs related to individual markets, as well as corporate expenses. Expenses
related to individual markets include expenses for the personnel and facilities
required to administer that market and neighboring markets. Corporate general
and administrative expenses represent personnel and facilities costs for Obie
Media's executive offices and centralized staff functions which include
accounting, marketing, human resources and technology management.

                                       18
<PAGE>
General and administrative expenses increased $1.1 million, or 20.5% to $6.6
million for the nine months ended August 31, 2004 as compared to $5.4 million in
the same period of fiscal 2003. The increase was related primarily to (1)
additional costs in the corporate marketing department in support of the annual
incentive contract sales mentioned above ($511,000), (2) management performance
incentives accrued in the fiscal 2004 period where none were accrued in fiscal
2003 ($127,000), (3) rent on the Chicago office space in fiscal 2004 ($180,000),
and (4) legal fees incurred in defending the VIA lawsuit ($185,000)

DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization expenses
increased $81,000, or 5.9 %, to $1.5 million in the nine months ended August 31,
2004 compared to $1.4 million for the same period in fiscal 2003. The increase
was due to increased loan cost amortization expense relative to the new
financing arrangements consummated in January 2004.

OPERATING INCOME. Due to the events and factors discussed above we generated
operating income of $1.8 million in the nine months ended August 31, 2004
compared to an operating loss of $258,000 in the same period of fiscal 2003.

INTEREST EXPENSE. Interest expense increased $61,000, or 3.5%, to $1.8 million
for the nine months ended August 31, 2004 compared to $1.75 million for the
comparable period of fiscal 2003. The increase was due primarily to increased
interest rates on the Company's new financing arrangements with CapitalSource
Finance, LLC.

LOSS ON DEBT EXTINGUISHMENT. The Company experienced a loss on debt
extinguishment resulting from the pay-off of its old debt in the first quarter
of fiscal 2004 with the proceeds from its new financing arrangements with
CapitalSource Finance, LLC. The loss is comprised of charges of approximately
$709,000 relating to the write-off of unamortized discount on the Chicago
Transit Authority settlement payoff, and approximately $252,000 relating to
unamortized prepaid loan costs on the previous debt arrangements.

PROVISION FOR INCOME TAXES. The Company accounted for all available loss
carryback refunds in the fiscal 2001 provision for income taxes. The Company has
substantial loss carryforwards, against which valuation allowances have been
provided. Since the operating loss carryforwards expire at certain times, we
have evaluated the likeliness of utilizing those carryforwards against future
taxable income in such time frames and have established a valuation allowance
accordingly. The current provision for income taxes, both for the 2004 and 2003
fiscal periods, is comprised of Canadian income taxes of one of our subsidiaries
that also operates in Canada.

INCOME (LOSS) FROM CONTINUING OPERATIONS. Due to the items and factors discussed
above we generated an operating loss from continuing operations of $979,000 in
the nine months ended August 31, 2004 compared to an operating loss of $1.5
million for the same period in fiscal 2003.


RESULTS OF DISCONTINUED OPERATIONS

Most transit arrangements include a provision that a certain percentage of net
revenues be shared with the transit authorities (transit fees) on a revenue
sharing basis (a certain percentage to the transit authority, the balance
retained by Obie), but often with minimum payment requirements. Agreements that
contain large minimum transit fee payment guarantees, relative to market size,
significantly hinder Obie's ability to manage its operating expenses in weak
economic environments. These high minimum payment requirements have prompted the
Company to negotiate modifications to such contracts, negotiate or effect early
terminations to such contracts, or exit such markets at the end of the contract
term.

                                       19
<PAGE>
As discussed above, discontinued operations contain the operating results, net
of income taxes, for transit markets from which we have exited. The discontinued
operations for the nine month period of fiscal 2004 include the operations of
San Antonio, Pittsburgh and Bridgeport. The same period of fiscal 2003 includes
the operations of Chicago; San Antonio; Cincinnati; Kitsap, Washington; Santa
Cruz, California; Bridgeport; and the Ontario, Canada markets of Pickering,
Whitby, Cambridge and St. Catharines.

NET INCOME (LOSS)

Due to the items and factors discussed above, Obie generated a net loss of $1.1
million during the nine months ended August 31, 2004, compared to a net loss of
$1.9 million in the same period of fiscal 2003.


LIQUIDITY AND CAPITAL RESOURCES

         On January 14, 2004, we entered into a new long-term financing
arrangement with CapitalSource Finance LLC. The arrangements includes a $17.5
million term loan and a $6.0 million revolving line of credit. Both obligations
mature on November 30, 2008. In addition, there is a $2.5 million term loan with
Obie Media Ltd. (the Company's Canadian subsidiary) which matures on January 31,
2009.

         The interest rates are prime plus 4.5% on the revolving line of credit
and prime plus 5.5% on the term loans. These margins may be reduced by up to
1.0% depending on the Company's leverage ratio. The effective rates on the
revolving line of credit and term loans at August 31, 2004 were 9.0% and 10.0%
respectively. The first date the margin may be adjusted is the quarter ending
November 30, 2004.

         Funds from the term loans were used to (1) pay off the existing term
loan with the previous lender, (2) pay off the balance of the settlement
obligation with the Chicago Transit Authority, and (3) pay off the promissory
note related to the purchase of the minority interest of O. B. Walls, Inc. Funds
from use of the revolving line of credit were used to pay off the existing
revolver with the previous lender and to fund closing costs and working capital
needs. Approximately $1.1 million of future borrowings is available under the
revolving line of credit.

         This new financing arrangement with CapitalSource Finance, LLC allowed
us to consolidate debt obligations, provide additional revolver availability,
and restructure principal payment obligations to better fit the growth and cash
flow needs of the Company. The term loan principal payment amounts are $1.0
million in fiscal 2004, $1.0 million in fiscal 2005, $2.0 million in fiscal
2006, $3.0 million in fiscal 2007, $11.1 million in fiscal 2008, with the
balance due at maturity. The revolving line of credit balance is due in full at
maturity.

         The loan agreement with CapitalSource Finance LLC contains financial
covenants regarding (1) minimum rolling EBITDA, (2) maximum leverage ratios, (3)
fixed-charge coverage ratios, and (4) interest coverage ratios, all of which are
measured on a quarterly basis. The Company was in compliance with all covenants
as of August 31, 2004. The loan agreement also restricts the Company's ability
to pay dividends. The loans are collateralized by substantially all of the
assets of the Company.


                                       20
<PAGE>
         The Company has historically satisfied our working capital requirements
with cash from operations and revolving credit borrowings. Our working capital
was $4.4 million at August 31, 2004 as compared to $4.9 million at November 30,
2003. The decrease was due primarily to funding the loan fees related to the new
financing arrangements.

         Acquisitions and capital expenditures, primarily for the construction
of new outdoor advertising displays, digital printing equipment and technology
related assets have been financed primarily with borrowed funds. At August 31,
2004, we had outstanding borrowings of $24.5 million, of which $24.2 million was
pursuant to credit agreements with CapitalSource Finance LLC, and $300,000 in
other notes. The Company's indebtedness is collateralized by substantially all
of its assets

         Our net cash provided from operating activities was $419,000 during the
nine months ended August 31, 2004, as compared to $168,000 for the same period
in fiscal 2003. The difference was primarily due to (1) a decrease in year to
date net loss ($769,000), (2) a smaller decrease in fiscal 2004 when compared to
fiscal 2003 in accounts receivable ($1.7 million), and (3) the effect, in fiscal
2004, of the loss on debt extinguishment ($961,000).

         Net cash used in investing activities was $1.2 million and $414,000
during the nine month periods ended August 31, 2004 and 2003, respectively. The
amounts were used in both years for equipment purchases, primarily automobiles
and computing equipment; the primary difference in the nine months ended August
31, 2004 is due to billboard construction and upgrades.

         Net cash used in financing activities was $326,000 for the nine month
period ended August 31, 2004, as compared to $578,000 in the same period of
fiscal 2003. The difference between the two periods is related to the effects of
the new financing arrangements that were consumated in the first quarter of
fiscal 2004.

         We expect to pursue a policy of measured growth through obtaining
favorable new transit district agreements, acquiring out-of-home advertising
companies or assets and constructing new outdoor advertising displays. We intend
to finance future expansion activities using a combination of internal and
external sources. We believe that internally generated funds and funds available
for borrowing under lender credit facilities will be sufficient to satisfy all
debt service obligations, to finance existing operations, including anticipated
capital expenditures, but excluding possible acquisitions, through fiscal 2004.
Our future acquisitions may require additional debt or equity financing.

SEASONALITY

         Our revenues and operating results historically have fluctuated by
season, generally following the advertising trends in our major transit markets.
Typically, results of operations are strongest in the fourth quarter and weakest
in the first quarter of our fiscal year which ends on November 30. Transit
advertising operations are more seasonal than outdoor advertising operations as
the Company's outdoor advertising display space, unlike its transit advertising
display space, is and has been sold largely by means of 12-month contracts. The
Company believes that the seasonality of revenues and operating results will
increase if transit advertising operations continue to expand more rapidly than
outdoor advertising operations. This seasonality, together with fluctuations in
general and regional economic conditions and the timing and expenses related to
acquisitions, the obtaining of new transit agreements and other actions that
have been taken to implement the Company's growth strategy, have contributed to
fluctuations in periodic operating results. These fluctuations likely will
continue. Accordingly, results of operations in any period may not be indicative
of the results to be expected for any future period.

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<PAGE>
ITEM 3. QUANTATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company has not entered into derivative financial instruments.


ITEM 4.  CONTROLS AND PROCEDURES

         Under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, the Company has evaluated the effectiveness of the design and operation
of its disclosure controls and procedures pursuant to applicable rules under the
Securities Exchange Act of 1934, as amended, within 90 days of the date of this
report. Based on that evaluation, the Company's Chief Executive Officer and
Chief Financial Officer have concluded that these disclosure controls and
procedures are effective. There were no significant changes in the Company's
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of their evaluation.


PART II - OTHER INFORMATION


ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         No matter was submitted to the shareholders for a vote during the three
month period ended August 31, 2004.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


(a)  Exhibits
31      Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32      Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)  The Company filed a form 8-K on July 15, 2004 reporting that it had issued
     a press release on July, 2004 reporting earnings for the fiscal quarter
     ended August 31, 2004. The Company filed an 8-K on July 28, 2004 announcing
     that it had appointed Moss Adams LLP as its auditors, replacing
     PricewaterhouseCoopers LLP.
     The Company filed an 8-K on September 20, 2004 announcing that it had
     entered into a definitive agreement to merge with Lamar Advertising
     Company.
..

Signature

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                  Obie Media Corporation



 Date October 15, 2004            By: /s/ GARY F. LIVESAY *
                                     ----------------------
                                      Gary F. Livesay
                                      Vice President - Chief Financial Officer

                                    * Signing on behalf of the registrant as
                                      principal financial and accounting officer

                                       22