UPDATED: CBS Corp. chairman-CEO Leslie Moonves is under increasing pressure amid growing speculation that controlling shareholder Shari Redstone is considering implementing shakeup of the CBS board and his ouster.

After a flurry of rumors on Wednesday morning, National Amusements, the holding company that controls CBS Corp. and Viacom, issued a statement of support for Moonves.

“National Amusements has tremendous respect for Les Moonves and it has always been our intention that he run a combined company,” the company stated.

Earlier, CBS issued a statement in response to a CNBC report suggesting that Moonves will be forced out if CBS and Viacom cannot come to terms on a merger agreement. The wrangling between CBS and Viacom on merger talks urged by Redstone has led to major tension between Moonves, the longtime leader of CBS, and Redstone, president of National Amusements, which controls CBS and Viacom.

“The industry and the marketplace know Leslie Moonves’ record and we think it speaks for itself,” CBS said in a statement.

The biggest sticking point in the CBS-Viacom merger talks is the question of management of the combined company. Moonves wants to retain his core management team anchored by chief operating officer Joe Ianniello. Viacom and Redstone are pushing for Viacom CEO Bob Bakish to be named president and COO of the combined company. The impasse has caused major strain between Moonves and Redstone, spurring speculation that Redstone will move to replace some CBS board members. At present, CBS’ 14-member board is believed to be solidly behind Moonves.

Viacom declined to comment.

CBS and Viacom shares held up reasonably well given the drama surrounding them. CBS shares were down 2% at the close of trading Wednesday to $51.02. Viacom was down about 1.7% to $30.51.

Talk of a board shakeup is coming just about a month before CBS holds its annual shareholders meeting on May 18 in New York. It’s not immediately clear if CBS’ bylaws would allow Redstone to mount an alternative slate of directors for election at the meeting. CBS’ annual proxy statement was sent out to shareholders on April 6.

Sources close to Redstone sought to downplay the level of animus and to emphasize that the focus at present is on allowing the merger negotiation process to run its course. In February, Viacom and CBS created special board committees to evaluate the prospects for a merger. That move came at the urging of National Amusements. Shari Redstone is seeking to bring the companies back together — 12 years after they were split up by her father, Sumner Redstone — amid a wave of consolidation and turmoil in the traditional media business.

CBS Corp. had been reluctant to reunite with Viacom given the turbulence in the domestic basic cable sector that is the biggest driver of Viacom earnings. CBS made an initial all-stock offer for Viacom that valued the company right around its $12 billion market cap, with no premium, and stipulated that Moonves and his core CBS management team would lead the company. That move set increased the tension in the process. The companies have barely addressed the merger talks in public but there has been plenty of private jousting and spinning via leaks to media outlets.

Viacom last week made a counteroffer to CBS that called for a higher ratio of CBS-to-Viacom stock exchange in the deal, enough to add about $2.8 billion to the purchase price on paper. And Viacom sought the president-COO role for Bakish. Viacom’s rationale is that a blend of CBS and Viacom management is appropriate as the companies will be integrating operations. CBS’ view is that Moonves needs the core lieutenants who have helped him successfully steer CBS since he took the helm as CEO in 2006.

There is also a big divide between the camps about the health of Viacom and its prospects in the near term. Under Bakish, who was appointed CEO in December 2016 after a chaotic year for the company, Viacom has made strides in securing the distribution base of its domestic cable networks, reshaping the leadership of Paramount Pictures and expanding its international presence. The view from the Viacom side is that the turnaround is well under way. From the CBS perspective, Viacom’s earnings trajectory is far from certain amid the headwinds battering the industry.

CBS is concerned that Viacom’s clutch of cable networks will be a drag on CBS’ ability to negotiate top-market distribution deals with MVPDs. CBS has prized its ability to drive a hard bargain with distributors through its focus on two core channels: CBS and Showtime.

Wall Street analysts have been divided on the whether the merger is in the best interests of both companies. Michael Nathanson of MoffettNathanson Research crunched the numbers and asserted in a note this week that an acquisition even at a higher price would deliver a 23% gain in CBS’ fiscal 2019 earnings. But Todd Juenger of Bernstein & Co. issued a scorching report on Tuesday scrutinizing every aspect of the deal and Viacom’s near-term prospects.

“We think the defining question for investors considering the pending CBS/(Viacom) nuptials is this: if CBS were an independent entity, would they be pursuing a bid for (Viacom)?” If you believe, like we do, the answer to that question is ‘absolutely not,’ then how hard do you want to work to try and convince yourself this will be good for CBS shareholders,” Juenger wrote.

The steady stream of headlines and uncertainty about the next steps has become a major distraction for executives and employees of both companies. On Wednesday, Bakish sought to highlight some positive news for Viacom, notably the success of Paramount’s horror thriller “A Quiet Place” and the big ratings for the return of “Jersey Shore” to MTV.

Here is Bakish’s full memo:

We know how hard everyone is working, and it’s incredible to see that work pay off.
I’m happy to say Paramount blew away industry expectations — and our own! — with the opening of A Quiet Place this weekend. An innovative concept, with great talent both behind the camera and in front, and a savvy distribution and marketing plan led to Paramount’s biggest opening since 2016. The film – which was the talk of SXSW and beloved by critics and audiences alike (a 97% “Fresh” rating on Rotten Tomatoes!) – brought in $50.2M domestically for its opening weekend, and added $21M internationally, with most major markets still to come. Given the movie was made for just $17M, it’s a monster hit by every measure. I want to congratulate Jim and the entire Paramount team for their tireless work on this film, and on the studio’s turnaround more broadly. We all feel the renewed energy and creative and strategic focus, and couldn’t be more excited for what’s ahead.
I also want to congratulate Chris and the MTV team for their huge Jersey Shore Family Vacationpremiere last week. With a 3.0 rating in its key demo, it was the network’s highest rated series premiere in six years, broke cable records as the most watched unscripted launch since 2012, and was the most social show of the day. This caps off MTV’s third consecutive quarter of prime growth, and jumpstarted the new quarter with high triple digit increases. I also love that Jersey Shore was the network’s first global premiere, with the show debuting in nearly 180 countries and territories. 
I couldn’t be more proud of the creative momentum across this company, and I hope you are, too. Thanks again for everything you’re doing to contribute to it – let’s keep it up!