Court Mast/Yahoo! The AOL-Time Warner deal may drive the high-profile Internet portal Yahoo! to find a partner.

"This validates the concept that the Internet is a major medium that the traditional media companies need to master," said Frank Gens, an analyst with International Data Corp., a Massachusetts-based Internet research firm. "Likewise, Internet leaders cannot go forward by just staying on the Internet. They have to be where their customers are, and their customers are everywhere."

Monday's announcement that America Online would buy Time Warner, the world's biggest media company in the largest deal ever, threw the media and phone businesses wide open for other mega-mergers, analysts said. Some believe the deal could help wipe out the last barriers among phone companies, old-line media and entertainment conglomerates.

``Any company is fair game. There is nothing that is sacred here anymore,'' said Larry Rice, chief investment officer at Josephthal Lyon & Ross.

Other analysts agree that while Internet companies have the technology, traditional media companies are the ones poised to provide the content, and that is really the core issue.

"This says as much about traditional companies� need to embrace the Internet as Internet companies� need to get real," Gens said.

With that said, the spotlight likely will focus on Yahoo, a high-profile Internet portal that is ripe for consolidation with a traditional media outlet, but so far has shunned any overtures.

"Yahoo is going to have to do some soul-searching," Gens said. "They are the premium Internet player, but so far they've expressed zero interest in marrying a traditional media company."

'This validates the concept that the Internet is a major medium that the traditional media companies need to master'

Yahoo�s stock jumped 29 1/4, to 436 1/2, after news of the Time Warner-AOL merger.

Among traditional media players, Disney needs to find a clearer presence on the Internet, Gens said.

"Disney has to be asking itself if the Go Network is really going to go," he said. "So far the answer is no."

Go.com, the Disney-owned Internet portal, has failed to generate the kind of traffic or high-profile presence that a company like Disney needs, he said."

Most traditional media companies, such as CBS/Viacom and News Corp., the parent company of foxnews.com, have struggled to find a way into the emerging Internet arena.

"NBC has certainly underperformed," Gens said. "It has the Snap network and it formed iNBC, but that has been underperforming."

And even though Wall Street last year gave a thumbs down a potential merger between internet portal Lycos and the USA Networks, they are seen as a potential merger candidate in the wake of the Time Warner AOL merger.

Lycos� stock jumped 5 11/16, to 76 7/16, in early afternoon trading.

"It�s a very unusual market we are involved in right now," said Michael Murphy, the director of trading for Kern Capital Management. "Things are happening that we would never see happen."

Murphy made an analogy to the automotive industry, where there were some 300 different car companies in the U.S. at the turn of the century. That number has been whittled down to three. There is no reason to think the same could not happen in the communications industry, regardless of what shape it takes when the technology has fallen into place.

"People will watch this to see how it breaks down," Murphy said. "If there is a positive spin on it you�ll see more of this type of thing."

Traditional media companies are learning that they cannot be complacent and wait for the Internet generation to move toward them. A merger like the one between Time Warner and AOL is creating a new kind of creature, and other companies are determined not to be left in the dust.

"The question will be a game of musical chairs," Gens said. "When the music stops, will there be a place to sit?"

—Reuters contributed to this report