Rumors spread through the weekend that 20th Century Fox is set to discontinue Fox Atomic, the production label that was started by Peter Rice in 2007 to generate comedy and genre films.

According to sources, label head Debbie Liebling is considering an offer to return as an executive at 20th Century Fox, where she would continue to develop comedies and genre pics for co-presidents Alex Young and Emma Watts. There is no word on what will become of the rest of the executive staff.

Fox would not confirm the move, and speculation is that the division is a casualty of not enough hits, but most importantly, that the division’s chief benefactor, Rice, was elevated to run Fox Broadcasting for Rupert Murdoch.

Fox Atomic was formed in January 2007 around Liebling, who as a Fox exec developed a flair for comedy on such Fox hits as “Borat” and “Dodgeball.” Before that, she served as a producer on the “South Park” series and the 1999 feature film.

The label has had its name on such genre efforts as “28 Weeks Later,” “The Hills Have Eyes II,” and “Turistas,” and comedies like “The Rocker,” “The Comebacks,” “Miss March,” and “12 Rounds.”

The comedies have mostly missed, and Fox Atomic’s free-standing marketing operation was shuttered in January 2008, with 20th and Searchlight taking over the sales efforts on Atomic product.

Atomic was hoping to make its biggest mark later this year, with two potentially commercial films that include the July 10 opener “I Love You, Beth Cooper,” which was directed by Chris Columbus and stars Hayden Panettiere; and “Jennifer’s Body,” the Diablo Cody-scripted Karyn Kusama-directed horror film that stars Megan Fox and Amanda Seyfried. That film will be released Sept. 18.