Time Warner Inc posted better-than-expected quarterly profit on Wednesday helped by its cable networks and the last installment of its Harry Potter movie franchise.

Shares rose around 5 percent in premarket trading, as the company also revealed an aggressive buyback strategy and an increase in its quarterly dividend.

Net profit rose to $773 million, or 76 cents a share, in the fourth quarter compared with $769 million, or 68 cents a share, a year ago.

On an adjusted basis, net income was 94 cents a share, ahead of average analysts' forecast of 87 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 5 percent to $8.2 billion.

Subscription fees at its cable networks including HBO rose 5 percent to $3.5 billion driven mainly by a 5 percent increase in carriage fees paid by cable and satellite distributors.

But cable network advertising was up just 2 percent, with growth benefiting from international operations.

Advertising revenue at its Time Inc magazine publishing business was flat during the quarter but total revenue was down 1 percent to $1 billion.

Warner Bros revenues rose 7 percent to $3.9 billion, due mainly to stronger home entertainment, video games and new subscription video-on-demand deals with companies like Netflix Inc and others.

The New York-based company forecast its full-year percentage growth rate in adjusted diluted net income per share to be in the low double digits from a base of $2.89 in 2011.

Time Warner also raised its quarterly cash dividend by 11 percent to $0.26 and announced a new $4 billion stock repurchase authorization by its board.

Miller Tabak analyst David Joyce said the company's capital allocation strategy was a positive for investors.

(Reporting By Yinka Adegoke, editing by Dave Zimmerman)