UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

Commission File Number 1-5846

THE LIBERTY CORPORATION

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

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

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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

     The aggregate market value of the voting stock held by non-affiliates of the Registrant as of June 30, 2004:

          The number of shares outstanding of each of Registrant’s classes of common stock as of February 15, 2005:

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of The Liberty Corporation Proxy Statement for the Annual Meeting of Shareholders on May 3, 2005 are incorporated into Part III, Items 10, 11, 12, 13, and 14 by reference.

This report is comprised of pages 1 through 57. The exhibit index is on page 45.

Part I

Item 1. Business

General

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

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

Television Broadcasting and Related Operations

     The following table shows data on the stations owned by the Company as of December 31, 2004:

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     The Company currently owns and operates fifteen network-affiliated television stations in the South and Midwest, thirteen of which were ranked No. 1 or No. 2 in their markets based on Nielsen Media Research average 3 book estimates (February, May, and November) 2004 ratings (Sun. – Sat.; 6:00A-2:00A). Eight of its stations are affiliated with NBC, five with ABC, and two with CBS. The fifteen stations cover approximately 3.35% of U.S. households.

     The fifteen stations operate in designated market areas ranked 50 to 179. The Company’s stations are located in geographically diverse and growing markets. Eleven of the fifteen stations are located in university centers. Many of the stations are also located in markets that are home to a mixture of large manufacturing plants, state capitals, transportation hubs, and United States military bases. None of the TV markets represented more than 11% of the revenues or 15% of operating income for the fiscal year ending December 31, 2004.

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

     The Company also operates a cable advertising company, CableVantage, Inc. (“Cable Vantage”), through which it represents nine independent cable operators in 17 locations that, in combination, reach approximately 450,000 subscribers.

Network Affiliations

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

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

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

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

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Sources of Television Operating Revenues

     The following table shows the approximate percentage of the Company’s gross television station revenues by source for the three years ended December 31, 2004:

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

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

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

Mandated Conversion to Digital Technology

     Unless exempted by a specific FCC extension, all station affiliates of ABC, CBS, NBC, FOX, and other non-affiliated commercially licensed stations were required to transmit a digital signal on their approved channels by May 1, 2002. Many television stations, including some of the Company’s, were granted two six-month extensions for tower construction delays or equipment unavailability. These extensions granted a delay in the deadline to May 1, 2003. Eleven of Liberty’s 15 stations were broadcasting their digital signals by May 1, 2003. Four others received extensions because of FCC administrative delays in processing requests for channel changes. Of those four, WSFA in Montgomery, AL began broadcasting a digital signal in July of 2004. The remaining three stations are expected to be broadcasting digital signals by the end of the third quarter of 2005. Liberty expects no FCC penalties as a result of these administrative delays.

     As the Company develops its digital technology, given its dominant presence in its markets, the Company believes it will be attractively positioned as a potential partner for new digital or data stream businesses that wish to develop in its markets. The Company estimates that an additional $7.0 million may be required over the next nine to twelve months for towers, antenna systems, transmitters, transmitter buildings, and other related equipment. This investment will establish basic full power digital television pass through at our fifteen stations, including simulcasting existing analog programming.

Federal Regulation of Broadcasting

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

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

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

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

     WWAY (Wilmington, NC), WIS (Columbia, SC), WSFA (Montgomery, AL), and WALB (Albany, GA) filed renewal applications during 2004. KAIT (Jonesboro, AR), KPLC (Lake Charles, LA), WLBT (Jackson, MS), WLOX (Biloxi, MS), WFIE (Evansville, IN), WAVE (Louisville, KY), and WTOL (Toledo, OH) will file renewal applications during 2005. KCBD (Lubbock, TX), KGBT (Harlingen, TX), and KLTV/KTRE (Tyler/Lufkin, TX), will file renewal applications during 2006. While the Company’s renewal applications have historically been granted without a hearing, the Company cannot guarantee that there will not be any challenges to the renewal of its FCC licenses.

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

     In 2003, the FCC released its bi-annual review of media ownership rules. Under the new rules, the “duopoly”, “one-to-a-market,” and newspaper-television cross-ownership prohibition rules were relaxed to allow broadcasters to own, under certain circumstances, more than one television station, or certain combinations of television stations, radio stations, and daily newspapers, in the same local area. Shortly after their publication the relaxed rules were challenged in court by media companies, media trade associations, activist groups, and other interested parties. In the fall of 2004, the Federal Appeals Court in Philadelphia issued its findings on the legal challenges these groups. The Court’s findings upheld many of the FCC’s revised rules, threw out some, and asked for modification of others. The FCC has decided to follow the directives of the Appeals Court and will not ask the US Supreme Court for a further review. Various individual media companies and trade associations, as well as activist groups, are expected to appeal the Philadelphia Court’s ruling to the US Supreme Court. It is possible that the absence of a federal agency in the appeal process could lessen the US Supreme Court’s inclination to hear the case. Until the situation is clarified, the FCC’s “old” rules for media ownership remain in effect.

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

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

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

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

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

     The Bipartisan Campaign Reform Act of 2002 restricts the availability of “soft money” in election campaigns and prevents an organization from using general revenues to fund issue ads before an election.

     Cable and Satellite “Must-Carry” or “Retransmission Consent” Rights. The 1992 Cable Act, enacted in October 1992, requires television broadcasters to make an election to exercise either certain “must-carry” or “retransmission consent” rights in connection with their carriage by cable television systems in the station’s local market. If a broadcaster chooses to exercise its must-carry rights, it may demand carriage on a specified channel on cable systems within its designated market area. Must-carry rights are not absolute, and their exercise is dependent on variables such as the number of activated channels on, and the location and size of, the cable system, and the amount of duplicative programming on a broadcast station. Under certain circumstances, a cable system may decline to carry a given station. If a broadcaster chooses to exercise its retransmission consent rights, it may prohibit cable systems from carrying its signal, or permit carriage under a negotiated compensation arrangement. Generally, the stations have requested must-carry status from the cable operators in their outlying coverage areas and have negotiated retransmission consent agreements with the cable operators in their metro coverage areas. Certain of the Company’s stations are currently in negotiation with various cable television systems to

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extend their retransmission agreements. At this time, it is not known what the exact outcome of these negotiations will be. However, the Company does not anticipate encountering any significant difficulties during this process.

     Cable operators are not currently required to carry both a station’s analog and digital signal at the same time. Nor are they required to carry more than one program stream from a station’s digital signal. However, it is anticipated that the Company will eventually be able to negotiate the retransmission of its analog and digital signal, or signals, with the cable television systems in its markets.

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

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

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

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

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

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

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

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

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     Industry Segment Data. Information concerning the Company’s industry segments is contained in Note 14 of the Consolidated Financial Statements and is incorporated in this Item 1 by reference.

     Employees. At December 31, 2004 the Company had approximately 1,400 full-time employees.

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

     Other Information. The Company has submitted to the New Your Stock Exchange a certificate of the Chief Executive Officer of the Company certifying that he is not aware of any violation by the Company of New York Stock Exchange corporate governance listing standards.

Item 2. Properties

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

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

Item 3. Legal Proceedings

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

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

     None during the fourth quarter of 2004.

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PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

     The Liberty Corporation’s Common Stock is listed on the New York Stock Exchange under the symbol LC. As of December 31, 2004, 860 shareholders of record in 37 states, the District of Columbia, Australia, and Canada held the 18,468,949 Common Stock shares outstanding. Quarterly high and low stock prices and dividends per share as reported by New York Stock Exchange Composite Price History were:

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

     As of December 31, 2004, the Company’s credit facility restricted payments for dividends and purchases of its common stock to no more than $180 million during the period January 1, 2004 through December 31, 2004, and for periods after January 1, 2005 to $100 million plus fifty percent of cumulative net income of the Company for all fiscal periods beginning January 1, 2004.

     Subsequent to December 31, 2004, the Company amended the credit facility. The amended credit facility restricts payments for dividends and purchases of common stock to no more than $180 million during the period January 1, 2005 through December 31, 2005, and for periods after January 1, 2006 to $100 million plus fifty percent of cumulative net income of the Company for all fiscal periods beginning January 1, 2005.

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ISSUER PURCHASES OF EQUITY SECURITIES

On February 3, 2004 Liberty’s Board of Directors extended to February 28, 2005 the Company’s authorization to purchase from time to time up to 4,000,000 shares of stock in the open market or directly negotiated transactions.

On February 8, 2005 Liberty’s Board of Directors extended to February 28, 2006 the Company’s authorization to purchase from time to time up to 4,000,000 shares of stock in the open market or directly negotiated transactions.

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Item 6. Selected Financial Data

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

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

FORWARD-LOOKING INFORMATION

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

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EXECUTIVE SUMMARY

     Net revenues increased approximately $18.8 million on a year-over-year basis, primarily due to a significant increase in political revenues. The year 2004 was a presidential election year that saw significant amounts of political spending by politicians and groups supporting their positions and specific social issues. The Company recognized $25.8 million of revenue from political spending during 2004, an increase of $15.0 million over 2003 levels. The year 2003 was an off-cycle year for national elections, and as such, lower political revenues were to be expected. Increases in local and national revenue augmented the impact of the increased level of political revenue in 2004. Operating expenses increased due mainly to planned annual increases in employee compensation, higher commissions paid to the Company’s sales staff as a result of increased local revenues, and increased medical insurance costs. These increases were partially offset by reduced levels of losses on disposal in 2004 as compared to 2003.

     During the third quarter of 2004, the statute of limitations expired related to reserves established for certain previous tax years, and accordingly such reserves were released. In addition, during the fourth quarter of 2004, the reserve for a specific examination was released due to management’s estimate of an expected favorable outcome. As a result, the full year 2004 effective tax rate is lower than it would be absent these events.

     In 2004, the Company adopted EITF Topic No. D-108, “Use of the Residual Method to Value Acquired Assets Other Than Goodwill” (“EITF Topic D-108”). Under EITF Topic D-108, registrants are required to use a direct value method for the impairment testing of indefinite lived intangible assets. Impairments of intangible assets recognized upon application of a direct value method by entities previously applying the residual method are to be reported as a cumulative effect of a change in accounting principle. As the Company has, in the past, used the residual method to value its FCC licenses, in connection with the adoption of Topic D-108, the Company reduced the carrying value of its FCC licenses by $62.8 million ($40.6 million net of income taxes) as the cumulative effect of a change in accounting principle.

     During 2004, the Company had capital expenditures of approximately $12.6 million, paid a special dividend of approximately $75.1 million in addition to its regular quarterly dividends, and purchased $46.2 million of its common stock. At December 31, 2004, the Company had cash and cash equivalents of approximately $16.4 million and $20.0 million of debt outstanding under its revolving credit facility.

     Subsequent to December 31, 2004, the Company amended its revolving credit facility. The amendment, among other things, extends the term of the facility through May 17, 2006 and increases the aggregate facility commitment from $100 million to $150 million. Also subsequent to December 31, 2004, the Company’s Board of Directors declared a special dividend of $4.00 per share, or approximately $74.0 million. The Company will use its credit facility to fund the special dividend.

CRITICAL ACCOUNTING POLICIES AND ASSUMPTIONS

     Financial statements prepared in accordance with accounting principles generally accepted in the United States require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes to the consolidated financial statements. Critical accounting policies comprise those policies that require the Company’s most difficult, subjective and complex judgments. These policies require estimates of matters that are inherently uncertain.

     Some of the more significant, and the most sensitive, of the Company’s accounting policies and assumptions relate to the consolidation of variable interest entities, as governed by Financial Accounting Standards Board Interpretation 46 (“FIN 46”), the procedures the Company uses to value its FCC licenses and goodwill in accordance with Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”) and EITF Topic No. D-108 “Use of the Residual Method to Value Acquired Assets Other Than Goodwill” (“EITF Topic D-108”), the procedures to evaluate certain of its investments for impairment, the assumptions used to determine the recoverability of deferred tax assets, and the assumptions and estimates used to establish reserves for income taxes that may become payable in future years as a result of examinations by tax authorities.

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

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     SFAS No. 142 and EITF Topic D-108 require the Company to use estimates and assumptions to determine the estimated fair value of its individual FCC licenses and its station group as a whole. The estimates and assumptions may include, among other things, the future cash flows to be generated by its stations, terminal multiples for assumed station sales, discount rates to be used in present value calculations, assumed values for fixed assets and network affiliation contracts, and future capital expenditure levels.

     The Company establishes impairments on specific assets at the time the Company determines the assets to have been impaired. The majority of the Company’s investments are in private debt and equity securities, and venture capital funds.

     For private debt securities the Company reviews information provided to it by the investee companies for indicators of impairment. Additionally, the Company will from time to time contact the management of the investee company and discuss its current situation and future prospects. The Company estimates the fair value of its investments in private debt securities by discounting the expected future cash flows using a current market rate appropriate for the yield, credit quality, and maturity of such investments. If the estimated fair value is determined to be less than the carrying value, the Company evaluates the impairment to determine if it is other-than-temporary. The Company evaluates the severity of the impairment and its ability and intent to hold the investment to maturity in determining if the impairment is other-than-temporary. As part of this analysis, the collectibility of the debt instrument is evaluated based on the most recent historical and projected financial information provided to the Company by the issuer and on the conversations with the investee company’s management, if applicable.

     For Cost method securities, equity investments in non-public entities that are not required to be accounted for under the equity method of accounting, the Company reviews the information provided to it by the investee companies for indicators of impairment (e.g. decreasing cash flows, decreasing sales or profitability, declining future prospects, or a significant write down of asset values). If such indicators exist, the Company performs an analysis to estimate the current fair value of the investment. Once it is determined that an impairment does exist, the Company considers the magnitude, severity, and duration of the impairment in determining if it is other-than-temporary.

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

     It is the Company’s policy to establish reserves for income taxes that may become payable in future years as a result of an examination by tax authorities. The Company establishes the reserves based upon management’s assessment of exposures related to the recognition of revenue or the deductions in its tax returns and the probability of payment. The reserves are analyzed periodically, and adjustments are made as events occur to warrant adjustment to the reserve. For example, if the statutory period for assessing tax on a given tax return or period lapses, the reserve associated with that period may be adjusted. In addition, the adjustment to the reserve may reflect additional exposure based on current calculations. To the extent the Company were to prevail in matters for which accruals have been established, statutory periods for assessing taxes lapse, or it be required to pay amounts in excess of reserves, the Company’s effective tax rate in a given financial statement period could be materially affected.

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

SEASONALITY OF TELEVISION REVENUES

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

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

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SUMMARY OF CONSOLIDATED RESULTS

The Year 2004 Compared With 2003

     Net revenues for the year ended December 31, 2004 were $219.1 million, an increase of $18.8 million from the $200.3 million reported for 2003. The most significant component of the increase in revenues is related to the higher levels of political revenue in 2004 as compared to 2003. Political revenue for 2004 was $25.8 million as compared to $10.7 million for 2003. This is consistent with the Company’s historical experience that advertising revenues in even-numbered years tend to be higher than in odd-numbered years due to advertising placed by or on behalf of candidates running for political offices. The Company expects the cyclicality of political advertising revenues to continue to affect its revenues in future periods.

     In addition to the significant increase in political revenue, national, and local revenues also increased. Local revenue was up $5.5 million, and national revenue was up $0.6 million on a year-over-year basis. Sales in the automotive, fast-food, and financial institution categories had increases over their 2003 levels, while most of the other categories tracked by the Company were flat or down from their 2003 levels. The Company does not know whether the increase in advertising spending by auto manufacturers and dealers, fast-food restaurants, or financial institutions will continue in future periods.

     Operating expenses increased $5.5 million on a year-over-year basis. Planned annual increases in employee compensation, higher commissions paid to the Company’s sales staff as a result of increased local revenues, and increased medical insurance costs were partially offset by reduced levels of losses on disposal. During 2003, a significant portion of the Company’s DTV equipment came on line, and significant amounts of other equipment were upgraded to digital. The new equipment and upgrades necessitated the retirement of a number of assets that were not yet fully depreciated, resulting in charges of approximately $2.2 million during 2003. While the Company would expect continued increases in employee base compensation related to annual salary increases and similar increases in medical insurance costs in future periods, higher levels of commissions paid to the Company’s sales staff will be dependant upon the realization of increased revenues.

     Corporate expenses were $19.5 million in 2004, an increase of $5.1 million as compared to the $14.4 million reported for 2003. The increase in corporate expenses is due mainly to planned annual increases in employee compensation, amortization expense related to restricted stock grants made during 2004, increased legal fees, additional accounting and professional fees related to Sarbanes Oxley compliance initiatives, and the $1.6 million charge taken related to the settlement of all outstanding issues associated with the terminated GNS media (“GNS”) transaction. During 2003, the Company announced that it was in negotiations with GNS for the purpose of entering into certain agreements associated with GNS’s proposed purchase of a television station. Those negotiations were subsequently terminated. The Company would expect continued increases in employee compensation of similar amounts in future periods. The Company would expect the increased expenses related to its Sarbanes Oxley compliance initiatives to continue through the first quarter of 2005.

     Net investment income for 2004 was a loss of $4.8 million. Interest earned on cash balances and notes receivable, and gains on the sale of investments in the Company’s venture capital portfolio were offset by $7.2 million of impairment charges taken mainly during the first and second quarters of 2004.

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     During the third quarter of 2004, the statute of limitations expired related to reserves established for certain previous tax years, and accordingly such reserves were released. In addition, during the fourth quarter of 2004, the reserve for a specific examination was released due to management’s estimate of an expected favorable outcome. As a result, the full year 2004 effective tax rate is lower than it would be absent these events. The Company’s effective tax rate, excluding these adjustments was 36.2% for 2004. The effective tax rate for 2003 was 37.5%

The Year 2003 Compared With 2002

     Net revenues for the year ended December 31, 2003 were $200.3 million, a decrease of $6.4 million from the $206.7 million reported for 2002. The most significant component of the decrease in revenues is related to the lower levels of political revenue in 2003 as compared to 2002. This is consistent with the Company’s historical experience that advertising revenues in odd-numbered years tend to be lower than in even-numbered years due to advertising placed by or on behalf of candidates running for political offices. Although political revenue was down in 2003 as compared to 2002, national and local revenues increased.

     National revenue increased $2.9 million on a year-over-year basis due mainly to increases in automotive advertising by the auto manufacturers. Local and regional advertising was up $4.3 million, due mainly to increases in automotive advertising by local auto dealerships and increases in healthcare and retail advertising. Political revenue for 2003 was $10.7 million as compared to $27.3 million in 2002. The year 2002 was a national election year and had record political revenues, as “soft money” was expected to be banned following that election cycle, and political support groups employed a “use it or lose it” philosophy.

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

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

     Corporate, general, and administrative expenses were $14.4 million for the year ended December 31, 2003, an increase of $0.9 million over the $13.5 million reported for 2002. Reductions in workers compensation expenses and legal and other

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professional fees were offset by higher directors’ and officers’ insurance premiums and onetime charges related to the wind up of contract obligations with the Company’s previous traffic and billing software vendor. During the fourth quarter of 2003, the Company negotiated an exit from the contract with its previous software vendor, making a payment of approximately $0.4 million in satisfaction of a portion of the remaining term of the contract.

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

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

INVESTMENTS

     During the year ended December 31, 2004, the Company had net investment losses of $4.8 million. Interest earned on cash balances and notes receivable was offset by impairments in the Company’s venture capital and strategic investment portfolios. During the second quarter of 2004, the Company recorded a $5.3 million impairment on one of its strategic investments, a developer of digital entertainment to be viewed at existing movie theaters. The Company fully reserved this investment due to the investee company’s inadequate cash balances and inability to secure financing from additional investors.

     During 2003, the Company reduced the carrying amounts of certain investments in its venture capital portfolio based on fair value information provided by the investment fund’s managers, and in its strategic investment portfolio based on an investee company receiving a “going concern” opinion from its auditors on its 2002 audited financial statements.

     At December 31, 2004, other long-term investments, included in the caption “investments and other assets” on the balance sheet, was comprised of approximately 22% private equity securities, 32% private debt securities, 14% venture capital limited partnerships, 14% low income housing tax credits, and 18% other long term assets.

     The Company has determined that it is not practicable to estimate the fair values of its private equity, venture capital, and low income housing tax credit investments because of a lack of primary and secondary market prices and the inability to estimate fair values without incurring excessive costs. Fair values for private debt securities are estimated by discounting the expected future cash flows using a current market rate applicable to the yield, credit quality, and maturity of the investments. Further discussion of investments and valuation is contained in Notes 2, 5, and 13 to the Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

     The Company’s short-term cash needs consist primarily of working capital requirements, expenditures associated with the initial implementation of DTV broadcast operations, regular quarterly dividends to shareholders, purchase of its common stock, and special dividends to shareholders, if and when declared by the Company’s Board of Directors. Historically, Liberty’s operations have provided sufficient liquidity to fund the operations of the Company and its regular quarterly dividends. While exact costs are not presently known, the additional capital expenditures required over the next nine to twelve months to comply with the FCC mandated DTV implementation are anticipated to be approximately $7 million.

     Subsequent to December 31, 2004, the Company amended its credit facility to among other things, extend the term of the facility through May 17, 2006 and increase the aggregate facility commitment from $100 million to $150 million.

     On February 8, 2005, the Company’s Board of Directors declared a special dividend of $4.00 per share, or approximately $74.0 million. It is anticipated that the Company will use its credit facility to fund some or all of the special dividend.

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

     On a consolidated basis, Liberty’s net cash provided by operating activities was $69.6 million for 2004, compared to $61.7 million for 2003, and $91.8 million in 2002. The increase in cash provided by operating activities in 2004 is due mainly to higher revenues, primarily from political advertising, in 2004 as compared to 2003. The decrease in cash

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provided by operating activities in 2003 is due mainly to the lower level of revenues from political advertising in 2003 as compared to 2002 and effect of deferred taxes in 2002.

     Liberty’s net cash provided by investing activities was $0.5 million in 2004 compared to cash used in investing activities $24.0 million in 2003 and $27.7 million in 2002. The decrease in net cash used in investing activities is due primarily to funds received on the sale of one of the Company’s strategic investments during 2004, lower levels of investing activity during 2004, and lower levels of capital expenditures in 2004 as compared to 2003. Capital expenditure levels during 2003 and 2002 were elevated due to the majority of the conversion to DTV expenditures being in those years. The decrease in net cash used in investing activities in 2003 is due to lower levels of net investing activity. During 2003, the Company made $5.9 million of strategic investments, as compared to $13.1 million in 2002. The strategic investments made during 2003 were mainly follow-on investments in the Company’s existing strategic investment portfolio.

     Net cash used in financing activities for 2004 was $115.9 million versus $43.4 million and $31.6 million in 2003 and 2002, respectively, due mainly to the payment of a special dividend during 2004 and increased activity in the Company’s share buy-back program . During the first quarter of 2004, the Company declared a special dividend of $4.00 per share, approximately $75.1 million, in addition to its normal recurring quarterly dividend. The Company initially borrowed $55.0 million under its revolving credit facility to partially assist in funding the special dividend. During 2004, the Company had net repayments of $35.0 million, leaving $20.0 million of outstanding debt at the end of 2004. In addition, the Company purchased approximately 992,000 shares of its common stock for approximately $46.2 million during 2004 compared to approximately 625,000 shares for approximately $26.6 million during 2003.

     Net cash used in financing activities was higher in 2003 as compared to 2002 due mainly to increased activity in the Company’s share buy-back program. During 2003, the Company purchased approximately 625,000 shares of its common stock for approximately $26.6 million as compared to approximately 404,000 shares for approximately $15.3 million during 2002.

     On February 8, 2005, the Board of Directors of the Company extended to February 28, 2006, the Company’s authorization to purchase from time to time up to 4 million shares of stock in the open market or through directly negotiated transactions. Also on February 8, 2005, the Company’s Board of Directors declared a special dividend of $4.00 per share, or approximately $74.0 million. The Company will use its credit facility to fund the special dividend.

     At December 31, 2004 the Company had $20.0 million of outstanding debt. At December 31, 2003, the Company had no outstanding debt. In March 2001, the Company entered into a $100 million unsecured 364-day revolving credit facility with a bank. The Company renewed the facility on substantially similar terms in each of the years 2002, 2003, and 2004. Subsequent to December 31, 2004, the Company amended the credit facility. The amendment, among other things, extends the term of the facility through May 17, 2006 and increases the aggregate facility commitment from $100 million to $150 million. At the end of the term of the facility, any outstanding principal and interest will come due, unless the bank, in its sole discretion, otherwise extends the facility. The facility provides that the funds drawn may be used for working capital and other general corporate purposes, capital expenditures, dividends, purchases of common stock, acquisitions, and investments.

     The revolving credit facility has both an interest coverage and a leverage coverage covenant. These covenants, which involve debt levels, interest expense, EBIT, and EBITDA (measures of cash earnings defined in the revolving credit agreement), can affect the interest rate on current and future borrowings. The Company was in compliance with all covenants throughout 2004.

     As of December 31, 2004, the Company’s current credit facility restricted payments for dividends and purchases of its common stock to no more than $180 million during the period January 1, 2004 through December 31, 2004, and for periods after January 1, 2005 to $100 million plus fifty percent of cumulative net income of the Company for all fiscal periods beginning January 1, 2004.

     The amended credit facility restricts payments for dividends and purchases of common stock to no more than $180 million during the period January 1, 2005 through December 31, 2005, and for periods after January 1, 2006 to $100 million plus fifty percent of cumulative net income of the Company for all fiscal periods beginning January 1, 2005.

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

     Other Company commitments are shown in Note 15 to the Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

     As of December 31, 2004, the Company had no off-balance sheet arrangements.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

     The above table does not reflect amounts related to cash income taxes to be paid in future years. Please see Note 10 to the Consolidated Financial Statements for additional information on historical cash taxes paid.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

     The Company is subject to the risk of fluctuating interest rates in the normal course of business, primarily as a result of the variable rate borrowings under its credit facility and fixed interest rates on notes receivable.

     Loans under the revolving credit facility bear interest at LIBOR plus an applicable margin, as stated in the credit agreement. The applicable margin is based on the Company’s leverage ratio, as defined in the credit agreement. As of December 31, 2004, the Company had $20,000,000 outstanding under its revolving credit facility and the variable interest rate associated with the revolving credit facility was 3.04%. Subsequent to December 31, 2004, the Company’s Board of Directors declared a special dividend of $4.00 per share, or approximately $74.0 million. The Company will use its credit facility to fund the special dividend, and as such will have larger balances outstanding under its credit facility during 2005 than it does as of December 31, 2004. In the last three years, the Company has not used derivative financial instruments to manage interest rate risk.

     Portions of the Company’s investment portfolio may be exposed to interest rate risk. As all of the Company’s private debt securities are classified as available-for-sale, its exposure to interest rate risk is mitigated if such investments are held until their maturity date. Based on a hypothetical 10% adverse movement in interest rates, the potential losses in future earnings and cash flows are immaterial if these investments are held to maturity. In the last three years, the Company has not used derivative financial instruments in its investment portfolio to manage interest rate risk.

     Portions of the Company’s investment portfolio may be exposed to equity price risk. While the Company held no marketable equity securities at December 31, 2004 or 2003, it may from time to time have investments in marketable equity securities acquired either through direct purchases or as a result of distributions from its venture capital funds. In the last

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three years, the Company has not used derivative financial instruments in its investment portfolio to manage market price risks.

     As of December 31, 2003, real estate related investments totaled $2.7 million. During 2004, the Company substantially completed the liquidation of these investments. These investments consisted primarily of residential land and lots in various stages of development and completion, and receivables related to prior land sales. The Company does not plan to make any future investments in real estate.

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

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Item 8. Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS
THE LIBERTY CORPORATION AND SUBSIDIARIES
(In $000’s, except share data)

See notes to consolidated financial statements.

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

See notes to consolidated financial statements.

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

(1)	Comprehensive income (loss), which includes the aggregate of net income (loss) and net unrealized investment gains (losses), was $(2,366), $23,962, and $(14,157), for 2004, 2003, and 2002, respectively.

See notes to consolidated financial statements.

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

See notes to consolidated financial statements.

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