The Bluths are out of business.

"Arrested Development," the critically praised but low-rated Fox show that won an Emmy for outstanding comedy series, as well as Emmys for writing, will not be resurrected on Showtime as rumors circulating for months have suggested.

A source close to the negotiations said that creator Mitch Hurwitz had decided after a lengthy period of debating an offer from Showtime that "Arrested Development reached its end, creatively, as a series."

Reached on his cell phone while filming a movie in Toronto, star Jason Bateman said he had mixed emotions about the news, saying he was sad for the series to end but happy that the beloved series will live on DVD for people to enjoy.

"I'm so proud of it and so like it as a TV fan that I'm happy we're not going to get a chance to screw it up," he said, in the deadpan style of his character, Michael Bluth, about the only sane member of the dysfunctional Bluth clan. "Our luck wouldn't have held. There would have been cast fighting. We would have messed it up."

Part of the reason Bateman can joke about it now -- and perhaps it will sting a little less painfully for diehard fans -- is that the fate of the series has been in limbo for so long. Though Fox hasn't even officially canceled the series, Fox entertainment President Peter Liguori said months ago that the network was moving on -- and the last four episodes from this truncated third season were burned off in February up against the opening ceremonies of the Winter Olympics, a sure sign of not being wanted.

Despite the Emmys, the audience never showed up to make "Arrested Development" a hit. Though Fox renewed it for a second season, it ended up cutting the order to 18 (a move spoofed in a later "Arrested Development" episode). When Liguori took over as entertainment president of Fox, one of the first things he was told, according to a source inside the network, was "You don't want to be the guy who cancels 'Arrested Development.' "

But risking a critical backlash was apparently easier to do than making the show profitable, so even though "Arrested Development" was brought back for its third and final season, it was moved to Mondays and limited to 13 episodes.

"Arrested Development" premiered in November 2003 and quickly became a critical darling for its brilliant writing, superb cast and multilayered jokes. Narrated by Ron Howard (whose company produced the series), "Arrested Development" had a faux-documentary, cinema verite style that traced the sorry path of the Bluths from the glory days of their home development company to their cash-strapped existence thanks to a government fraud bust.

The series mined hilarious performances from Bateman, Jeffrey Tambor, Jessica Walter, David Cross, Will Arnett, Tony Hale, Portia de Rossi and others, plus a string of memorable guest stars.

Bateman, who's in Toronto filming "Mr. Magorium's Wonder Emporium" alongside Dustin Hoffman and Natalie Portman, said "Arrested Development" opened a lot of doors for him. "The people who hand out jobs in L.A. were basically the only ones who watched the show, which worked out great for me. I'm getting a lot of flattering opportunities." Bateman said the reason he got the role in his latest film is "a direct result of 'Arrested Development.' "

Everyone involved in the series benefited, Bateman said, including Fox. "At least they had a presence at the Emmys, which was new for them."

For a series that never attained more than cult status, "Arrested Development" set off one of the strangest behind-the-scenes bidding wars when it was clear Fox had given up on it. The Chronicle first reported that Showtime was interested in picking up the series and moving it to pay cable, where it would not only add significant value to the Showtime lineup but also be immune to the ratings pressure of broadcast television. Then word came that ABC wanted to get into the bidding (probably because "Arrested Development" would have been a good stylistic match for that network's midseason comedy "Sons & Daughters"). Once the ABC interest surfaced, sources inside Fox said the network became worried that it would suffer great embarrassment if it lost the series to a rival that managed to make it a hit. That's partly why no official cancellation came from Fox.

But 20th Century Fox TV, the studio that made "Arrested Development," was clearly pursuing a home for the series. The Showtime offer was reportedly for two 12-episode seasons, with the entire cast coming back. Though the deal was on the table for some time, Hurwitz sounded out cast members about whether it made sense for the show to continue.

Noted for his work on getting all the details right (not just the writing, but the visual humor and the ceaseless references to past episodes and previous punch lines), Hurwitz ended up putting an inordinate amount of time into the series, and no doubt that workload played a part in his decision to pass on the Showtime offer.

Though the demise of one of television's most devastatingly funny comedies deals a blow to the hopes of a diehard audience (not to mention the sitcom genre), Hurwitz and his writers deserve credit for a tremendously effective wrap-up of the myriad story arcs in "Arrested Development." The series would have had to change gears on Showtime.

And as Bateman said about the three-season DVDs: "It's nice that there's a medium to preserve it."

"Arrested Development" creator Mitch Hurwitz says he will not be continuing with the series, throwing a major -- likely fatal -- monkey wrench into attempts to keep the Emmy-winning laffer alive for a fourth season.

Series producers 20th Century Fox TV and Imagine TelevisionImagine Television had agreed on a deal to move "Arrested," previously on Fox, to Showtime -- assuming Hurwitz was willing to come back. In the end, however, a mix of creative and financial concerns has prompted Hurwitz to move on.

"The fans have been so ardent in their devotion and in return ... I've given everything I can to the show in order to try to live up to their expectations," Hurwitz told Daily Variety on Monday in a telephone interview from GothamGotham. "I finally reached a point where I felt I couldn't continue to deliver that on a weekly basis."

Nonetheless, Hurwitz said he put off making a final decision on his involvement so Showtime and 20th could talk about a possible deal.

"Of course, if there was enough money in it, I would have happily abandoned the fans' need for quality. But as it turns out, there wasn't," he said.

Indeed, Hurwitz and 20th have long been at odds over finances, sparring over everything from the show's budget to Hurwitz's own compensation. The two sides were unable to come to terms on an overall deal last year, and while creative concerns were clearly at play in Hurwitz's decision, coincoin may have been a key factor, insiders said.

Hurwitz said he had briefed most of the show's cast about his decision, as well as some of the writers. He also talked with exec producer-narrator Ron HowardRon Howard, who asked Hurwitz if he would be willing to continue as a consultant on "Arrested" should 20th and Imagine find a network willing to continue the skeinskein without Hurwitz.

"I said I'd be happy to do that, but that as showrunner, I've gone as far as I can go," he said.

Showtime entertainment toppertopper Bob Greenblatt made it clear in January that Hurwitz's participation in the show was essential to a deal (Daily Variety, Jan. 20). With Hurwitz out of the equation, Showtime is no longer a viable home for "Arrested," insiders said.

It doesn't help that one of Hurwitz's key deputies, exec producer Jim Valleley, also says he won't do the show without his boss. "We couldn't do the show without Mitch Hurwitz, and I wouldn't want to be the guy who tried," Valleley said, who called the apparent end of the show "heartbreaking."

Hurwitz said he had lunch with Showtime entertainment chief Bob Greenblatt even though he was leaning against continuing with the show. "He was actually very persuasive in telling me how much he believed in the show. I walked away thinking, 'Maybe,' " Hurwitz said.

Despite word of tension between Hurwitz and 20th, scribe said the studio and its sister net deserve credit for having produced and aired three seasons of the show.

"I can honestly say I'm appreciative. They put a lot of money into this, and I put a lot of my life into this," he said.

He also hinted that while "Arrested" may have run its course as a TV show as far as he's concerned, he would be interested in reviving the franchise as a feature film.

Reps for 20th and Showtime declined comment. One person familiar with the studio's thinking, however, said fans of the show shouldn't write an obit for "Arrested" just yet, noting 20th is the studio that revived "Family Guy."

I walked away thinking, 'Maybe,' " Hurwitz said.