Six years ago I had a professor who told my class that big businesses would become America’s first-class citizen and the people would come second.
Yesterday, when the Justice Department approved the merger between the two satellite radio companies who dominate the satellite radio industry – Sirius and XM – my professor’s foresight seemed to take a step closer to reality.
The merger is not final and still needs to be approved by the Federal Communications Commission.
This is just the latest proposed merger for the first quarter of 2008. Microsoft and Yahoo are still discussing a merge. Financial institution JP Morgan is courting Bear Stearns and of course Bank of America’s Countrywide investment.
Corporate mergers within the media industry became a household discussion with Telecommunications Act of 1996. The Act sought to create competition, but resulted in the opposite by lifting some of the FCC’s ownership restrictions.
Financial merges and acquistions could be expected with our economy. Bank of America acquired Countrywide for a $2 billion steal.
JP Morgan’s original offer to Bear Stearns was reported at $2 a share before uping the offer to $10 a share. Bear Stearns stock one year ago was $150 a share.
In the early 1980s there were approximately 50 mass media corporations. Ten years later that number shrank to nine corporations and today there are about seven.
Businesses keep getting bigger and creating a better market for themselves. Merging limits competition and gives the corporation cost control. We the consumers generally get the short end of the stick, losing the option of consumer choice when businesses no longer needing to compete for our money.
However, mergers have the potential to be beneficial to the people. Instead of focusing on competing against each other, corporations can focus on bettering their product or service.
Of course, the lack of competition leaves room for corporations to do the exact opposite.
We don’t know what will happen in the future, but the corporate world is getting smaller, giving top businesses more control.