William M. Ellinghaus Dies at 99; Presided Over AT&T Breakup

William M. Ellinghaus, who as president of the American Telephone and Telegraph Company, the world’s largest corporation, helped preside over its breakup in the early 1980s — and who a few years earlier had been instrumental in saving New York City from default — died on Tuesday at his home in Bronxville, N.Y. He was 99.

His death was confirmed by his son Eric.

A gregarious executive known for his community service and his support of the arts, Mr. Ellinghaus was president and chief operating officer of AT&T at the height of its power, near the end of his 44-year career in the telephone industry. In settling a longstanding government antitrust suit, he oversaw the divestment of the company’s regional Bell System into independent telephone companies, in exchange for entry into lucrative new telecommunications markets.

Besides helping to rescue New York City from near bankruptcy in the 1970s, Mr. Ellinghaus became the executive vice president of the New York Stock Exchange; chairman of the New York-area PBS station WNET; and chairman of the New York Chamber of Commerce and Industry.

He received 10 honorary doctorates from leading colleges and universities, although he had never attended college.

Straight out of high school in Baltimore in 1940, he was hired for an entry-level job by the Chesapeake & Potomac Telephone Company, a regional company that served Maryland, Virginia, West Virginia and the District of Columbia. He became an installer of the black rotary-dial telephones that were widely used at the time, considered a luxury by those who could afford them.

After three years in the Naval Reserve during World War II, Mr. Ellinghaus returned to his telephone job. He worked as an installer, a repairman and an office and district manager for nearly a decade before starting his rise through the management ranks.

He became a Chesapeake vice president in 1960, an AT&T vice president in New York in 1965 and, in 1970, president of the New York Telephone Company and AT&T’s vice president for rates, planning and government relations. In that post, he dealt with technological advances, competition from other carriers, and pending federal antitrust litigation that threatened the culture and direction of the behemoth parent corporation.

In New York business and government circles, Mr. Ellinghaus became a man-in-the-news troubleshooter. He resolved a phone workers’ strike in 1971 that halted installations and repairs in New York for weeks; negotiated rate increases with the state; and, in 1975, restored service to 173,000 telephones after Bell’s worst fire crippled a Manhattan switching center. Concurrently, as president of the New York Telephone Company from 1970 to 1976, he coped with service problems that had plagued that subsidiary for years.

Mr. Ellinghaus, second from left, and the banker Felix Rohatyn, left, in 1975, when they were both members of the Municipal Assistance Corporation. (The other men in the photo are unidentified.)Credit…Neal Boenzi/The New York Times

As New York City’s fiscal crisis loomed in 1975, Mr. Ellinghaus, the New York investment banker Felix Rohatyn and others were drafted for key roles in a rescue effort. After years of profligate spending, the city had dwindling tax revenues and huge budget deficits; was low on cash for operating expenses; and, unable to borrow more, faced horrendous personnel layoffs, service cuts and bond defaults. Washington rejected a plea for a bailout.

But in a plan devised by the state, Mr. Ellinghaus was named chairman of the Municipal Assistance Corporation, which was created to contain the crisis, and was later appointed to the Emergency Financial Control Board, which took over city fiscal affairs. The board imposed severe cuts in city services and spending and closed some hospitals, libraries and fire stations.

Federal loan guarantees were eventually worked out, banks deferred maturity on some bonds, investors returned, and, after several years, the crisis faded.

After Mr. Ellinghaus was named vice chairman of AT&T in 1976, he resigned from the Emergency Financial Control Board, citing “the heavy demands of my new assignment.” Gov. Hugh L. Carey, who had appointed him, hailed Mr. Ellinghaus as “a model of the most desirable blend of government-private sector expertise working together for the common good.”

Mr. Ellinghaus was named president and chief operating officer of AT&T in 1979, and over the next eight years he was deeply involved in strategies to defend the company against competitors and government litigation. Washington aimed to dismantle the company’s regulated monopolies over local and long-distance phone services and its equipment manufacturing arm, Western Electric.

For nearly a century, AT&T had been guided by the goal of providing local telephone service to every American who wanted it. It created the Bell System of 22 regional subsidiaries, which together supplied more than 80 percent of the nation’s phone service. It also had virtual monopolies on long-distance calling, allowing 1,600 independent carriers to tie into its lines.

AT&T had survived wars, depressions, floods, earthquakes, scandals, lawsuits, competition, bad jokes and cable-gnawing squirrels. But with its stranglehold on the telephone business, it seemed clear to economists, government regulators and many ordinary Americans that it had finally grown too big.

The antitrust suit was settled in early 1982. Approved by a federal judge, it required AT&T to give up its regional operating subsidiaries, which were to become independent phone companies. In return, AT &T was allowed to keep its long-distance and equipment-manufacturing business, and was given a free hand to compete in computer communications, veri processing and other lucrative fields, which had previously been prohibited.

Mr. Ellinghaus and three other senior company officials removed themselves from day-to-day operations to focus on settlement-related issues, which took nearly two years to resolve. The changes took effect on Jan. 1, 1984. Mr. Ellinghaus retired three months later at his own request.

“I leave this job with a great sense of satisfaction,” he said. “These past two years we have earned well and we have served the public well. Simultaneously, we devised and implemented a plan to disassemble the world’s biggest business and divest the Bell companies in sound condition, as we promised we would.”

Mr. Ellinghaus watched Charles L. Brown, the chairman of AT&T, announce the breakup of the company on closed-circuit television in 1982. Mr. Ellinghaus was the company’s president and chief operating officer at the time.Credit…Sara Krulwich/The New York Times

William Maurice Ellinghaus, known as Buddy, was born in Baltimore on April 19, 1922, the second of three children of N. Andrew and Medora (Watkins) Ellinghaus. William and his siblings, Richard and Beverly, grew up in Baltimore. William graduated from Forest Park High School in 1940 and soon joined Chesapeake & Potomac as an installer. His father was a nonmanagement employee of the company.

In 1942, Mr. Ellinghaus married Erlaine Dietrich, his high school sweetheart. They were married for 66 years and had eight children. She died in 2008 at 85. In 2010, Mr. Ellinghaus married Ruth Kelly Miller.

Besides his son Eric, he is survived by his second wife; two daughters, Marcia Barone and Barbara Gurne; five other sons, Douglas, Raymond, Mark, Christopher and Jonathan; 26 grandchildren and 25 great-grandchildren.

Mr. Ellinghaus enlisted in the Navy shortly after the Japanese attack on Pearl Harbor in 1941, and from 1943 to 1945 he was a stateside Naval Reserve sonarman and instructor. He was later a deep-sea fisherman and finished furniture in a workshop at his home in Bronxville.

He was the executive vice chairman of the New York Stock Exchange from 1984 to 1986 and the chairman of WNET (Channel 13) from 1984 to 1990. He also headed the board of the National Arts Stabilization Fund, formed in 1983 by the Ford, Mellon and Rockefeller Foundations to provide grants and fiscal advice to arts groups.

In a statement when he retired, Mr. Ellinghaus recalled the Bell divestiture as painful but necessary.

“It’s been a unique episode in the annals of business management,” he said, “and while in my heart I did not relish the task, I nonetheless can write ‘finish’ to it with a sense of ultimate accomplishment that few if any executives have ever experienced.”

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