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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

(Mark One)

Commission File Number 1-5846

THE LIBERTY CORPORATION
(Exact name of registrant as specified in its charter)

135 South Main Street, Greenville, SC 29601
(Address of principal executive offices)

Registrant’s telephone number, including area code: 864/241-5400

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

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock as of the latest practicable date.

PART I, ITEM 1

THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED BALANCE SHEETS

See Notes to Consolidated and Condensed Financial Statements.

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THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS

See Notes to Consolidated and Condensed Financial Statements.

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THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS

See Notes to Consolidated and Condensed Financial Statements.

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THE LIBERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
September 30, 2002
(Unaudited)

1.		BASIS OF PRESENTATION
		The accompanying unaudited consolidated and condensed financial statements of The Liberty Corporation and Subsidiaries have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The information included is not necessarily indicative of the annual results that may be expected for the year ended December 31, 2002, but it does reflect all adjustments (which are of a normal and recurring nature) considered, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The December 31, 2001 financial information was derived from the Company’s previously filed 2001 Form 10-K. For further information, refer to the consolidated financial statements and footnotes thereto included in The Liberty Corporation annual report on Form 10-K for the year ended December 31, 2001.
2.		ADOPTION OF FASB STATEMENT NO. 142 GOODWILL AND OTHER INTANGIBLE ASSETS
		During the second quarter of 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 142 “Goodwill and Other Intangible Assets”. Statement No. 142 requires that goodwill and certain other identified intangibles no longer be amortized to earnings, but instead be reviewed for impairment. The amortization of goodwill and certain other identified intangibles ceased upon adoption of the Statement, which for the Company was January 1, 2002. The Company recorded $3.9 million ($2.4 million net of income taxes) and $11.3 million ($7.0 million net of income taxes) of amortization expense related to intangibles that are no longer required to be amortized for the three and nine month periods ending September 30, 2001, respectively. In connection with the adoption of Statement No. 142, the Company reduced the carrying value of its FCC licenses by $76.4 million ($47.4 million after-tax) as a cumulative effect of a change in accounting principle.
		The following table reconciles net income for the three and nine month periods ended September 30, 2001 as reported to the adjusted September 30, 2001 net income, had Statement No. 142 been in effect as of January 1, 2001.

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The following tables reconcile basic and diluted earnings per share as reported at September 30, 2001 to the adjusted September 30, 2001 basic and diluted earnings per share, had Statement No. 142 been in effect as of January 1, 2001.

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At September 30, 2002 and December 31, 2001, the Company’s intangible assets not subject to amortization were comprised of FCC licenses and network affiliations. At September 30, 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 2006 is expected to be as follows:

3.		COMPREHENSIVE INCOME
		The components of comprehensive income, net of related income taxes, for the three and nine month periods ended September 30, 2002 and 2001, respectively, are as follows:

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4.		SEGMENT REPORTING
		The Company operates primarily in the television broadcasting and cable advertising businesses. The Company currently owns and operates fifteen television stations, primarily 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 income before income taxes, excluding unusual, or non-operating items.
		The following table summarizes financial information by segment for the three and nine month periods ended September 30, 2002 and 2001:

There were no material changes in assets by segment from those disclosed in the Company’s 2001 annual report other than the impact of the adoption of FASB Statement No. 142 “Goodwill and Other Intangible Assets” as described in Note 2 to the Consolidated and Condensed Financial Statements. The goodwill that appears on the face of the balance sheet arose through the acquisition of certain television stations, and therefore has been assigned in its entirety to the Broadcasting segment.

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5.		EARNINGS PER SHARE
		The calculation of basic and diluted earnings per common share from continuing operations is as follows:

6.		CREDIT FACILITY
		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.
7.		RECLASSIFICATIONS
		Certain reclassifications have been made in the previously reported financial statements to make the prior year amounts comparable to those of the current year.

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PART I, ITEM 2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Unaudited)

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 stations 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.

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 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 tend to be higher as they benefit from advertising placed by candidates for political offices and demand for advertising time in Olympic broadcasts.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2002 Compared to Three Months Ended September 30, 2001

Total net revenue increased $10.0 million, on a year-over-year basis. Station net revenue increased $9.2 million for the same period. Station net revenue was up due mainly to the presence of political spending during 2002 that was absent during 2001 and increases in both local and national revenue. Political revenue for the third quarter of 2002 was $6.5 million as compared to $0.4 million in the third quarter of 2001. Local revenue was up eight percent and national revenue was up 18 percent on a year-over-year basis. Local revenue increased primarily due to increases in the automotive, retail, and fast-food advertising categories. National revenue increased mainly due to increases in the automotive category. Cable and other revenue increased due to political revenue in 2002 that was not present in 2001, and generally stronger advertising environments in several of its markets.

Operating expenses, which include amortization of program rights, were $30.6 million for the third quarter of 2002, an increase of $2.9 million over the $27.7 million reported for the third quarter of 2001. The increase in operating expenses is mainly attributable to higher levels of sales commissions due to the increased revenue base, accruals for performance based bonuses in 2002 that were not earned during 2001, the addition of nightly and weekend news casts at one of the Company’s stations, and annual salary increases across the Company.

Depreciation and amortization was $4.4 million for the third quarter of 2002, a decrease of $4.0 million over the $8.4 million reported for the third quarter of 2001. During the first quarter of 2002, the Company adopted FASB Statement No.142 “Goodwill and Other Intangible Assets”. Statement No. 142 requires that goodwill and certain other identified intangibles no longer be amortized to earnings, but instead be reviewed for impairment. Had Statement No. 142 been effective as of the beginning of the first quarter of 2001, reported depreciation and amortization expense would have been approximately $4.5 million. (See Note 2 of the accompanying Notes to Consolidated and Condensed Financial Statements for further details).

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Management’s Discussion and Analysis

Net investment income for the third quarter of 2002 was a loss of $0.1 million as compared to a loss of $1.9 million for the third quarter of 2001. During the third quarter of 2002, interest income from cash balances of approximately $0.4 million was offset by losses recorded in the Company’s venture capital, real estate and marketable equity portfolios. The most significant component of net investment income during the third quarter of 2001 was the recognition of $3.2 million of impairments. During that quarter, the Company determined that some of its venture capital investments had carrying values in excess of their fair values and that some of those excesses were other than temporary.

Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30, 2001

Total net revenue increased $14.6 million, on a year-over-year basis. Station net revenue increased $12.6 million for the same period. Net revenue was up due mainly to the presence of political spending during 2002 that was absent during 2001 and increases in local and national revenue. Political revenue for the first nine months of 2002 was $12.1 million as compared to $1.2 million in the first nine months of 2001. Local and national revenue were both up five percent on a year-over-year basis. Local revenue increased primarily due to increases in the automotive and fast-food advertising categories, while national revenue increased primarily due to increases in the automotive category. Network compensation was down 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 revenue increased due to political revenue in 2002 that was not present in 2001, generally stronger advertising environments in several of its markets, and start up operations at certain locations in the previous year being fully operational during 2002.

Operating expenses, which include amortization of program rights, were $90.0 million for the first nine months of 2002, an increase of $6.5 million over the $83.5 million reported for the first nine months of 2001. The increase in operating expenses is mainly attributable to higher levels of sales commissions due to the increased revenue base, accruals for performance based bonuses in 2002 that were not earned during 2001, increased personnel costs related to the addition of personnel in the Company’s cable advertising business, the addition of nightly and weekend news casts at one of the Company’s stations, and annual salary increases across the Company.

Depreciation and amortization was $13.3 million for the first nine months of 2002, a decrease of $10.4 million from the $23.7 million reported for the first nine months of 2001. During the first quarter of 2002, the Company adopted FASB Statement No.142 “Goodwill and Other Intangible Assets”. Statement No. 142 requires that goodwill and certain other identified intangibles no longer be amortized to earnings, but instead be reviewed for impairment. Had Statement No. 142 been effective as of the beginning of the first quarter of 2001, reported depreciation and amortization expense would have been approximately $12.4 million. (See Note 2 of the accompanying Notes to Consolidated and Condensed Financial Statements for further details).

Net investment income for the first nine months of 2002 was $0.1 million, as approximately $3.6 million of interest income, venture capital distributions, and gains on the sale of real estate were offset by $3.5 million of impairment charges taken in the Company’s venture capital and private equity portfolios. The net investment income of $4.0 million reported for the first nine months of 2001 was related to the interest earned on $135 million of residual insurance operations sales proceeds and gains from the Company’s marketable equity and real estate portfolios, offset by $3.2 million of impairments recorded in the Company’s venture capital portfolio. The residual insurance operations sales proceeds were remitted at the

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Management’s Discussion and Analysis

end of the first quarter of 2001 to the federal government to pay income taxes related to the November 2000 sale of the company’s insurance operations.

Broadcast Cash Flow Information

The Company has included operating cash flow and broadcast cash flow data because management believes that such data are commonly used as measures of performance among companies in the broadcast industry. The Company also believes that these measures are frequently used by investors, analysts, valuation firms, and lenders as some of the important determinants of underlying asset value. Operating cash flow and broadcast cash flow should not be considered in isolation, or as alternatives to operating income (as determined in accordance with generally accepted accounting principles) as an indicator of the entity’s operating performance, or to cash flow from operating activities (as determined in accordance with generally accepted accounting principles) as a measure of liquidity. These measures are believed to be, but may not be, comparable to similarly titled measures used by other companies.