By Nick Kostov 

PARIS -- European media group Vivendi SA is cutting EUR300 million in costs from its pay-TV unit Canal Plus in the company's latest effort to combat competition for sports rights and from online video services.

The reduction, of which EUR60 million to EUR80 million will be saved in the second half of this year, marks the latest move by Vivendi Chairman Vincent Bolloré to shake up the pay-TV group in a bid to reach a break-even point in France by 2018. It said that EUR150 million worth of cuts would come from program production and publishing costs.

Vivendi, which disclosed the cuts alongside its second-quarter earnings, said its adjusted net income dropped 3.1% to EUR187 million on a comparable basis from the same period last year, below the expectations of analysts. Revenue fell 1.9% to EUR2.55 billion as Canal Plus once again posted declines in sales and subscriber numbers in France.

"The cost-cutting plan is welcome and is the confirmation that Mr. Bolloré intends to make Canal Plus a viable business," said Charles Bedouelle, analyst at Exane BNP Paribas.

For Vivendi, a lot is at stake in shaking up Canal Plus. The pay-TV group is Vivendi's largest business, accounting for more than half of its revenue. The unit is also central to Vivendi's attempts to build an integrated media group to challenge Sky PLC and Netflix in Europe.

Vivendi's earnings before interest, taxes and amortization, a measure of profitability closely watched by analysts, dropped 42% to EUR174 million, pushed lower by a 47% drop at Canal Plus. Core earnings at its music business, Universal Music Group, rose 11% due in large part to an increase in streaming revenue.

Mr. Bolloré has ruffled feathers in recent months as he seeks to piece together a media empire focused on southern Europe.

He has been seeking to amend an agreement with Mediaset SpA to buy its pay-TV business after finding "significant differences in the analysis" of the results of the unit while conducting due diligence. His refusal to move forward with the original terms of the deal has created a high-stakes battle pitting Mr. Bolloré against Silvio Berlusconi, the former Italian prime minister whose family controls the Mediaset board.

The Italian company last week asked a Milan tribunal to enforce its contract with Vivendi for the sale of its pay-TV unit, saying it could seek damages of more than EUR1.5 billion if Vivendi fails to respect the accord.

But Vivendi said Thursday that the contract with Mediaset could become void Sept. 30 as the two parties were unlikely to gain the European Commission's clearance before that date.

In response, Mediaset said the Sept. 30 deadline could be extended and reiterated that the contract between the two companies is binding and that it remains unwilling to change the terms of the deal.

In its earnings release, Vivendi said its cash pile had dwindled to EUR2.1 billion on June 30, down from EUR6.4 billion on Dec. 31 as it spent on to acquisitions, dividend payments and a share-buyback plan during the first half of the year.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

August 25, 2016 15:20 ET (19:20 GMT)