The Deal of the Century: The Breakup of AT&T

by Steve Coll

When contemplating such a radical strategy, which by its nature contravened the precepts of Bell System culture, it was helpful for executives like Hugel to address the bottom line: the interests of AT&T’s three million shareholders. This was not simply an obligation of corporate officers, who serve at the pleasure of a company’s shareholders. It was a matter of self-interest and even survival. No matter what course they chose in October 1981 or later, Charlie Brown and his senior managers had to be certain they protected themselves and their board of directors from shareholder lawsuits, which at the least would be embarrassing and distracting, and at the worst could cost them millions of dollars and their jobs and reputations. The only way to prevent litigation that challenged their management decisions was to pursue a strategy that could be justified purely as a matter of profit and loss. To each of the alternatives facing AT&T’s senior executives that fall—the Quagmire II deal with Justice, congressional legislation along the lines of S.898, continued litigation against the Justice department, the interintra split—a price tag had to be attached.