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'Gravity' and HBO Generate Record Revenue for Time Warner (TWX)

NEW YORK (TheStreet) -- Time Warner (TWX) posted record quarterly revenue in the fourth quarter, carried by the success of Oscar-nominated "Gravity" and the growth of subscription-only HBO.

The media conglomerate posted $8.6 billion in quarterly sales, a 5% year-over-year increase, and net income of $1.17 a share. Analysts polled by Thomson Reuters had expected $8.4 billion in revenue and per-share earnings of $1.15.

HBO, formerly grouped with Turner Broadcasting Systems' CNN and TBS, reported a 6% increase in revenue thanks to 8% growth in subscription sales over the quarter.

Over the full year, revenue for the channel, which counts critic favorite "Game of Thrones" among its programs, rose 4% to a total $4.9 billion.

"HBO remains in a league of its own, once again receiving the most Primetime Emmy Awards of any network, while tying for the most Golden Globe Awards and recording its biggest gain in domestic subscribers in 17 years," said Time Warner CEO Jeff Bewkes in a statement.

At the company's movie studio, Warner Bros., quarterly revenue spiked 7% to $4 billion on the back of strong theatrical releases for "Gravity" and "The Hobbit: The Desolation of Smaug" and video game sales of "Batman: Arkham Origins." The division received an industry-leading 21 Academy Award nominations, including Best Picture for "Gravity" and "Her."

Full-year revenue saw slower growth of 2% to $12.3 billion, with sales hampered by lower television licensing income.

Publishing arm Time Inc. reported that full-year revenue declined 2%, a result of falling newsstand and domestic subscription revenue. Time Warner said the Sports Illustrated publisher is on track to be spun-off into a separately-traded company by the end of the second quarter.

Across its portfolio excluding Time Inc., Time Warner reported full-year revenue of $29.8 billion, $200 million above consensus, and net income of $3.77 a share, 2 cents higher than analystss forecasts.

The New York-based company also said it had repurchased around $3.9 billion worth of stock over 2013 and has authorized a total $5 billion in share repurchases this year.

By market open, shares had risen 1% to $61.80.

TheStreet Ratings team rates TIME WARNER INC as a Buy with a ratings score of A+. The team has this to say about its recommendation:

"We rate TIME WARNER INC (TWX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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