Canal+ Shares Hit Two-Month Low on French Pay-TV Tax Hike Concerns

Shares in Canal+ continued their decline on Thursday, hitting a two-month low, following a report that the French government is considering a significant tax increase on linear pay-television services.

Proposed Tax Hike

According to the French financial daily *Les Echos*, the government is weighing a proposal to raise the value-added tax (VAT) on these services from the current preferential rate of 10% to the standard rate of 20%. The potential change could be included in France's draft budget, which is scheduled for release on October 1st.

This move would reverse a previous agreement with Canal+ on the existing two-tier VAT structure. Currently, the 10% rate applies to linear television, while the 20% rate is already applied to streaming services such as Netflix, Disney+, and Canal+'s own streaming offerings.

Potential Financial Impact

The tax increase would have a direct financial impact on the company. Key figures include:

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• €2 billion: The approximate portion of Canal+'s domestic linear revenue subject to the 10% VAT rate.
• €200 million: The potential direct negative impact on net income and EBITA, before any mitigating actions are taken.

To offset the hit, Canal+ could raise prices, though this carries the risk of increased subscriber churn. The company might also reduce its spending on French cinema, which currently stands at around €160 million against a contractual minimum of €130 million. Other cost-cutting measures in programming and administration are possible, but many contracts are fixed commitments.

Analyst View and Uncertainty

Analysts at Bernstein estimate the net impact on Canal+ would be between €50 million and €100 million after factoring in potential price increases and spending cuts. This figure represents approximately 10% of the firm's median 2026 EBITA forecast of €735 million for the media group.

Significant uncertainty remains as to whether the tax hike will be implemented, and Canal+ is expected to lobby heavily against the proposal. It is also unclear if the government plans to raise the 10% preferential VAT rate for other sectors that currently benefit from it, such as hotels, restaurants, and museums.