Time Warner Inc reported stronger-than-expected quarterly results courtesy of hit movies such as Sherlock Holmes and The Hangover, and it became the second major media company in as many days to raise its dividend.

Time Warner, slimmed down since spinning off both Time Warner Cable and AOL last year, posted fourth-quarter net income of $627 million, or 53 cents a share, reversing a net loss of $16 billion, or $13.41 a share, a year earlier when it wrote down the value of its assets.

Excluding items and discontinued operations, profit rose to 55 cents a share from 19 cents, the company said on Wednesday. Analysts had expected it to post earnings of 52 cents, according to Thomson Reuters I/B/E/S.

With a business increasingly concentrated on movies, magazines and TV shows, Time Warner's revenue rose 2 percent to $7.3 billion, which was also ahead of expectations.

Time Warner also said it would use part of its cash to return money to shareholders by boosting its dividend by 13.3 percent and increasing the money set aside to repurchase stock to $3 billion from $1 billion.

News Corp, a key rival, announced plans on Tuesday to increase its dividend, too. That media companies would be returning more cash to shareholders seemed a pipe dream a year ago, with spending by advertisers and consumers alike under immense pressure.

Judging from results by News Corp and Time Warner, however, the media industry is turning a corner and investors are reaping some reward.

Revenue from Time Warner's film division, where The Hangover became the best-selling comedy DVD of all-time last year, rose nearly 7 percent. Revenue from its networks division, home to Turner Broadcasting and HBO, rose 4 percent. Only publishing saw a decline in sales.

This is Time Warner's first earnings report since spinning off AOL, the online company that became part of Time Warner in 2000 in what many consider one of the most disastrous corporate mergers in history.

These days, Chief Executive Officer Jeff Bewkes wants to concentrate on one big business: creating content. He has also taken a hard line on costs, a strategy that is underpinning results and cheering investors, who have driven the stock up 45 percent in the last year.

Looking ahead, Bewkes said in a statement that Time Warner in 2010 wanted to improve our efficiency, expand internationally and accelerate the digital transition in our businesses. While doing so, the company said it expected 2010 earnings to rise in the mid-teens on a percentage basis.

(Reporting by Paul Thomasch; Editing by Lisa Von Ahn and Derek Caney.)