Stock at Vivendi, the French media conglomerate, plunged 4% in morning trading Friday as investors failed to buy into either Vivendi’s plans to slash costs by €300 million ($338.6 million) at its loss-making Canal Plus channels in France or Vivendi’s argument that its April deal with Mediaset could soon be declared void.

Vivendi’s cost-cutting program was announced Thursday evening after close of trading as Vivendi unveiled lower-than-expected second quarter results. Total second-quarter revenues dipped 1.9% to €2.55 billion ($2.9 billion), while earnings before interest, tax and amortization (EBITA), the hardest hit of Vivendi indicators, plummeted 41.6% to €174 million ($196.4 million) vs. second quarter 2015.

The best news came from upbeat results for the Universal Music Group, thanks largely to streaming, up 65%, and from Canal Plus’ international pay TV subscription base, up 7.7% in revenues as, for the first time ever, Canal Plus Group’s international individual subscribers (5.7 million) proved higher than in mainland France (5.5 million).

Accounting for French and international activities, including Studiocanal, the Canal Plus Group continues to turn a profit –  €133 million ($150.1 million) for the second quarter. But income was down 7.6% at €440 million ($496.6 million) for the first half of the year, “notably as a result of the increased losses suffered by Canal Plus channels in France,” a Thursday press statement claimed.

Vivendi’s plans for cost-cutting at these six channels aims to generate €300 million savings in 2018, allowing the channels to break even for the year, Vivendi said Thursday. Of these savings, €150 million ($169.3 million) would come from programming, €50 million ($56.4 million) from technical resources and €100 million ($112.9 million) from marketing, it added.

“This strategy, which is contrary to [Vincent] Bolloré’s ambition to invest €2 billion [$2.26 billion] in Canal Plus, as announced in November 2015, seems dangerous as it risks accelerating the subscribers decline,” said Jean-Baptiste Sergeant, at Paris stockbroker MainFirst.

At its results presentation, Arnaud de Puyfontaine, chairman of Vivendi’s management board, reconfirmed that it would not honor an April 2016 deal to buy all of Mediaset Premium, the pay TV unit of Italy’s Mediaset, given that Mediaset had supplied an “artificially inflated” business plan. Vivendi also put forward the thesis that the April contract could be declared void on Sept. 30, the deadline for European Commission approval which the Commission is unlikely to meet.

Mediaset fired back after Vivendi’s pronouncement that the deadline for Commission green light could be extended.

With Mediaset and Fininvest, the Berlusconi’s family investment company, having filed a combined lawsuit against Vivendi for €2.1 billion ($2.4 billion) in damages from breach of contract, there’s a growing sentiment that Vivendi now needs Mediaset – not only to bolster its plans for a southern European media empire but also to avoid a costly legal settlement – almost as much as Mediaset needs Vivendi, to prop up its flagging pay TV operation.

So it is hardly surprising that, despite so much mudslinging in public, reports are building, the latest from Reuters, that closed doors Vivendi-Mediaset talks are ongoing. The market looks, however, to already be factoring in some kind of hit for Vivendi, whatever the course of those conversations.

Nick Vivarelli contributed to this report