Sirius and XM Satellite Radio as a Monopoly

Sirius and XM Satellite Radio as a Monopoly

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When the word monopoly is spoken most immediately think of the board game made by Parker Brothers in which each player attempts to purchase all of the property and utilities that are available on the board and drive other players into bankruptcy. Clearly the association between the board game and the definition of the term are literal. The term monopoly is defined as "exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices" (Dictionary.com, 2008). Monopolies were quite common in the early days when businesses had no guidelines whatsoever. When the U.S. Supreme Court stepped into break up the Standard Oil business in the late 1800’s and enacted the Sherman Antitrust Act of 1890 (Wikipedia 2001), it set forth precedent for many cases to be brought up against it for years to come.
Such as the case of two major players in the entertainment community of Sirius and XM who both have a majority of the marketplace in the satellite radio business and their talks of consolidating both businesses into one. This article on Ars Technica (Lasar, 2008) expands on the idea that these corporate entities should not be allowed to merge into one corporation, but above that should also be fined for even considering the idea in back rooms and locked boardrooms. Using the model case of the Sherman Anti-Trust act in Standard Oil, the corporation floated around having anywhere between eighty five percent and ninety five percent. With those numbers, XM and Sirius would fall into the numerical category of filling that condition of a monopoly.
Since this debate still rages on, many people argue both sides of the story of the pros and cons. Many would argue that not breaking up monopolies actually increase the competition of companies that are attempting to break into some of the market share that the monopoly already has, more so than the free market that exists now. Proponents of the Sherman Anti-Trust act argue that “absolute power corrupts absolutely” (Martin, 1996) as originally quoted by Baron Acton. The idea that no competition within the business world establishes no risk and reward that is all part of the entrepreneur spirit of the U.S. spirit.
The U.S. constitution and the Sherman Anti-Trust act has very little to do with laws but more so to eliminate the concept of no competition. If the merger between XM and Sirius was approved, it would be allowing two large corporate entities that have already established a large portion of the customer base within their field of expertise.

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This merger would be going against the concept of competition and allowing these companies to have free reign of this service. The involved entities would argue that their market share is relative to the size of their market. Satellite Radio although making strides to increase the level of popularity among the average consumer is still relatively a developing medium for entertainment and still fully unproven as a business model. Even with the huge coup of Howard Stern broadcasting exclusively on the Sirius Broadcasting Network, people have been slow to adapt this form of communication.
It is still unclear whether or not the federal government will eventually approve the merger between the two corporations of XM and Sirius is still in appeal after numerous trials and hearings have been held. Constitutionally speaking, the merger is clearly in violation of the Sherman Anti Trust act. Then again, the main argument against this breach is the fact that this act in the Constitution was breaking up a gigantic entity such as oil (or future disputes of this act; transportation, entertainment and gaming) and not concentrating on such a small subset of an industry. For example, if Microsoft and Apple were to announce that they were merging their companies together they clearly would not be allowed to move forward with the transaction as the computing manufacturing industry is booming, extremely lucrative and above all a proven medium. The merger still has a lot of steam left in it’s case so it is by no means dead in the water but it clearly needs to focus on the fact that their industry is unproven and not similar to industries that manufacture or create goods like the oil industry.

References:
Lasar, Matthew (2008, June 8). Coalition demands XM/Sirius pay millions for swindling FCC. Ars Technica, Retrieved June 8 2008, from http://arstechnica.com/news.ars/post/20080608-coalition-demands-xmsirius-pay-millions-for-swindling-fcc.html

Martin, Gary (1996). Power Corrupts. Retrieved June 8, 2008, from Power Corrupts Web site: http://www.phrases.org.uk/meanings/288200.html

monopoly. (n.d.). Dictionary.com Unabridged (v 1.1). Retrieved June 09, 2008, from Dictionary.com website: http://dictionary.reference.com/browse/monopoly

Sherman Anti Trust Act. (2001). In Wikipedia [Web]. San Fransisco: Wikipedia. Retrieved June 8 2008, from http://en.wikipedia.org/wiki/Sherman_Antitrust_Act
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