As Michael Ovitz continues to shop his Artists Television Group, the production company pinkslipped 18 employees Wednesday afternoon.

The downsizing affected mostly assistants and business-affairs personnel, although a number of execs at the vice president level were let go.

ATG prexy Eric Tannenbaum informed his staff of the layoffs during a meeting at the company’s Beverly Hills office. The terminations were effective immediately; only 20 staffers remain at the company as of today.

ATG had already started to pare its operation as the company adjusted to a smaller size vs. last season, when it exploded out of the box with four fall series.

Wednesday’s dismissals only heightened questions about the long-term future of ATG, which will co-produce the CBS sitcom “The Ellen Show” and WB reality gamer “Lost in the USA” this fall, as well as the WB midseason entries “Cedric the Coach” and “No Ordinary Girl.”

Nina Lederman, senior VP of creative affairs, and Dawn Steinberg, senior VP of casting, left the company earlier this summer (Daily Variety, June 26).

ATG’s status has been unclear since word surfaced that Ovitz had was looking for a deal.

Looking for ally

Studios and networks including Paramount, CBS, NBC, 20th Century Fox TV and Warner Bros. have all met with ATG in recent weeks about forming various strategic alliances (Daily Variety, Aug. 3).

Paramount could be a front-runner in some sort of arrangement — particularly because of the Viacom synergy on “Ellen,” which ATG co-produces with CBS Prods.

Execs who have met with Ovitz said a wide variety of partnership or acquisition scenarios, including a full absorption of the company, were discussed.

But ATG hasn’t found any takers yet and rumors that the production company might shut down haven’t subsided.

Potential partners have said that ATG’s current distribution deal with Sony (which expires next June) has complicated matters. That pact, as previously reported, advances ATG roughly $375,000 per seg for every sitcom it gets on the air and $450,000 for every hourlong skein.

In exchange, Sony takes a 17.5% distribution fee based on gross revenue generated by sales of ATG product. That could limit any backend potential for any partners or buyers.

Also of concern to potential partners: ATG’s sizable talent roster, which boasts valuable names but also carries significant overhead. ATG paid top dollar for a number of high-level writer-producers such as Darren Star.

Payments coming

Scribes under overall deals have continued to be paid on schedule every two weeks. But at least one rep said a client hadn’t been paid yet under an individual deal and that other one-shot deals hadn’t been reimbursed. As source within the firm, however, said “ATG intends to pay its bill.”

Meanwhile, Tannenbaum, the former Columbia TriStar TV prexy who joined ATG in 1999, continued to operate this week as though it were business as usual.

He met with CBS execs Tuesday to pitch a drama script from Tom Fontana and Michael Dinner, who previously served as a co-exec producer on ATG’s short-lived drama “The Street.”

Fontana and Dinner are both in the middle of multiyear, multimillion-dollar deals at ATG.