French pay-TV group Canal Plus, a major backer of local cinema, has lost the broadcasting rights to French Premier League soccer matches, raising fears in France’s struggling film industry of deep cuts in investment.

Canal Plus lost the rights in an auction Tuesday to Chinese-owned Spanish broadcasting group Mediapro, which is based in Barcelona. Analysts and industry players say the loss could be both a major blow to Canal Plus and to French film, since the pay-TV company is obligated to inject 9.5% of its net sales into financing local movies. Its investment has already dipped from €173 million in 2011 to €151 million in 2016, and is expected to have dropped 20% in 2017.

Along with films and original series such as “Versailles” (pictured), live sport has been key to recruiting subscribers for Canal Plus. But the Vivendi-owned pay-TV group has steadily been losing sports rights to deep-pocketed rivals such as beIN Sports, Altice and now Mediapro, as it can’t keep up with the skyrocketing acquisition prices.

“Given the loss of these major rights, we estimate that Canal Plus will lose half of its retail subscribers in France (4.7 million in March 2018) in 2020 and 2021…and should lose €1 billion in revenues per year, which should lead to a significant operating loss in 2021,” said Jean-Baptiste Sergeant, an analyst at Main First.

“In the worst-case scenario, Canal Plus France will fold, which would imply high restructuring costs and impairment charges,” said Sergeant.

Maxime Saada, the chairman and CEO of Canal Plus, said the company might have walked out of the French Premier League auction empty-handed, but at least it “won’t be dying [from] over-paying [for] sports rights.”

Saada appeared to be alluding to debt-ridden Altice, which paid a massive sum for rights to English Premier League and the Champions League matches and which was not part of the French Premier League auction.

Mediapro will pay €1.15 billion per year to broadcast the French Premier League games from 2020 to 2024 – a 60% increase from the price paid by Canal Plus for the previous term, which ends June 2020. After winning the auction, Mediapro announced the launch of a channel dedicated to soccer in France.

Canal Plus said it would now explore the possibility of sub-licensing some rights and striking distribution deals with premium-sports rights-holders, which the company has done in the past with beIN Sports and Eurosport. Such a deal would allow Canal Plus’ satellite platform to distribute Mediapro’s new sports channel.

Didier Duverger, who heads up French financing institution Natixis Coficine, said the negative impact of Canal Plus’ loss of French Premier League rights could be mitigated if it is able to ink a distribution deal with Mediapro.

For the financing of French films, in which Canal Plus still plays an important role, the loss of these rights is seen by many as bad news, though it’s possible Canal Plus could double down on movies and series to make up for the loss of soccer rights, said producer-distributor Jean Labadie at Le Pacte. “Canal Plus will need more premium content to feed its pipeline,” Labadie said.

Some industry figures, including Duverger, say that an investment pullback by Canal Plus could make it harder for some French movies to get financed. But Duverger said the change could prove beneficial since France produces too many films.

The number of French films produced annually has grown from 240 to 300 during the last decade. Average box office per film, however, has not kept pace. Fewer movies could benefit each film’s performance at the box office.

With Canal Plus expected to play a less significant role in film financing, the question is who might step up. Streaming services such as Netflix aren’t yet part of the picture as they are prohibited from showing films in France for 36 months after they first hit cinemas.

The French film sector has so far failed to find a consensus to revise its outdated windowing schedule. The government is now expected to set new windowing rules to be approved by the parliament.

“We’re not on the eve of a transformation of distribution and consumption modes. We’re in the middle of it,” Duverger said. “And we better wake up very fast to strengthen our anti-piracy law and acknowledge that some films are produced for theaters and others aren’t.”