DIRECTV (NASDAQ:CMCSA) reported its fourth-quarter results prior to Thursday's market open. The satellite television provider's revenue results were reasonably in line with analyst expectations, but earnings came in a good bit higher than anticipated.

The results
The average analyst estimate called for $8.91 billion in sales for the quarter, but DIRECTV beat that slightly with revenue of $8.92 billion. That result was also roughly 4% higher than the $8.59 billion the company earned in the same quarter of 2013. Full-year revenue climbed to $33.3 billion, an increase of roughly 5% from 2013's sales total.

Quarterly earnings of $1.53 per share represented a roughly 9.3% beat on the average analyst estimate for EPS of $1.40. DIRECTV's fourth-quarter earnings were flat year over year, but full-year 2014 adjusted diluted EPS of $6.08 was up 12% from $5.42 in 2013.  Revenue growth for the quarter offset a decline in margins, but still lagged the industry sales growth average of about 7%.

Fourth-quarter operating profit before depreciation and amortization, or OPBDA, declined by 2.2%; reported operating profit dipped 5.9% from the same period of 2013; and reported operating profit margin fell from 15.5% to 14.1%. The margins slide came primarily from the performance of DIRECTV Latin America. Reported OPBDA margin for the Latin America segment fell from 31.1% in fourth quarter 2013 to 28.8% in 2014, and operating profit margin declined from 14.6% to 10.9%.

For the company's U.S. segment, quarterly OPBDA margin slipped from 22.4% to 21.1%, while operating profit margin dipped from 16.3% to 15.1%. Increased programming costs and customer acquisition expenses contributed to the quarterly margin decline. Full-year operating profit margin increased from 18% in 2013 to 18.3% in 2014. Average revenue per user, or ARPU, in the fourth quarter increased roughly 5% year over year. Full-year ARPU for U.S. subscribers increased roughly 4.7%.

DIRECTV's free cash flow for the quarter was down 18.6%, but full-year free cash flow increased 21% to $3.3 billion.

What does the future look like for DIRECTV?
Growing its business and improving margins in territories outside the U.S. are DIRECTV's primary challenges. The U.S. segment will remain the company's most important, but the market is relatively mature and competition is heavy compared to that in other segments. DIRECTV posted a strong fourth quarter in the U.S., but domestic subscriber growth has been on a downward trend, and established alternatives pressure DIRECTV's ability to continue raising its prices, particularly as it doesn't match the strength of television-and-Internet service bundles from companies such as Time Warner Cable and Comcast. DIRECTV's special TV packages have been big ARPU drivers and helped it perform comparatively well in subscriber trends relative to competitors, but the company's U.S. business faces significant threats as more TV content is available on the Internet. Packages such as NFL Sunday Ticket have been major hits for DIRECTV, but the company is paying a lot for this content, and the costs needed to secure valuable content deals are likely to increase as Internet distribution becomes more attractive.

The company lists about 20.35 million subscribers in the U.S. segment, 12.47 million subscribers from its Latin America segment, and 5.64 million subscribers from its Sky Brasil segment. DIRECTV has almost as many subscribers in foreign markets as it does domestically, but roughly 80% of the TV provider's fourth-quarter revenue was generated from its U.S. segment. DIRECTV add 980,000 subscribers in Latin America during the four quarter -- a solid performance, but also down roughly .9% from the corresponding quarter in the prior year. DIRECTV also faces ongoing currency headwinds with its Latin America segment as the U.S. dollar strengthens.