Artists Television Group Cuts About Half Its Staff

Michael Ovitz’s money-losing Artists Television Group laid off nearly half its staff late Wednesday, amid a swirl of rumors that the company was on the verge of closing its door after failing to find an investor despite a yearlong search.

Late Wednesday afternoon, Eric Tannenbaum, president of Artists Television Group, announced to the staff that 18 of the company’s 38 employees were being laid off immediately, according to an ATG source.

Neither Ovitz nor Tannenbaum returned calls Wednesday.

But the source said the work force reductions included business affairs and production personnel as well as assistants. The highest-ranking employee affected is Bill Phillips, senior vice president of production.

People close to the company said the cuts were necessary because of the company’s minimal slate of fall prime-time shows. While ATG had one of the biggest rosters of new shows going into the fall prime-time television season a year ago, it had far less success in its second year of business.

Only two new shows were picked up from ATG by the networks this fall. CBS ordered a comedy starring Ellen DeGeneres, and the WB network will air a reality show called “Lost in the USA.” None of the five programs the company produced for last season were invited to return, including Darren Star’s expensive drama “The Street.”

Ovitz, the former super agent, built Creative Artists Agency into the most powerful talent agency in Hollywood before leaving to become president of Walt Disney Co. in the late 1990s. He was only a year at Disney.

Shortly after leaving Disney, Ovitz formed Artists Management Group in December 1998, envisioning a sports, television, music and movie production business that would draw on his Hollywood connections and talent under management. Among AMG’s clients are actors such as Robin Williams and directors such as Oliver Stone.

Television production, an unfamiliar business for Ovitz, was his biggest gamble.

Ovitz, who initially was looking for $150 million or more to bankroll the TV enterprise, was turned down by every major Hollywood studio as well as foreign partners and non-Hollywood entities, including AT&T.; As a result, Ovitz has been financing the company with his own money--a highly unusual move in the industry.

The main impediment in landing a partner is his alliance with Sony Corp., which is advancing money to ATG to cover production costs in return for a distribution fee for selling the programs here and abroad. Any studio would want distribution rights in exchange for an equity investment, but Sony has been unwilling to alter its deal with ATG.

Sony sources say Ovitz approached the studio this summer trying to persuade the studio to merge ATG into its television group, and Sony said no.

Ovitz also has approached other companies about a potential merger without success.

Ovitz’s affiliated management company--AMG--has continued to expand, recently signing big names such as actress Lara Flynn Boyle. Though it laid off 2% of its work force several months ago, it is now said to be up to full staff, sources say.

However, on the television side, Wednesday’s layoff follows a smaller downsizing several months ago.

*

Times staff writers Corie Brown and Meg James contributed to this report.