The deal undoubtedly sent a wake-up call to other media companies, both traditional and interactive, to explore their own partnerships.

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

``It's the beginning of a new consolidation in the market. We will start to see media companies aligning themselves with the likes of AOL,'' said William Nuti, president of Cisco's Europe Middle East and Africa operations.

Speaking to reporters during a Cisco-sponsored conference in Tel Aviv, Nuti added that such mergers will be a boon to Cisco, which is a worldwide leader in networking for the Internet.

``For us, it's fantastic news,'' he said of the AOL-Time Warner deal. ``Anytime there is significant investment in the Internet that infusion of new investment creates new opportunities for us.''

The most immediate pressure is on big content-based media companies, such as Disney and CBS/Viacom.

Disney has been pouring money into Go.com, its Internet portal, while CBS has been building a number of Internet plays -- but neither have any sort of proprietary broadband distribution. And Go.com has failed to generate the kind of traffic or high-profile presence that a company like Disney needs.

"Disney has to be asking itself if the Go Network is really going to go," said Frank Gens, an analyst with International Data Corp., a Massachusetts-based Internet research firm. "So far the answer is no."

Indeed, most traditional media companies, such as NBC 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."

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 validates the concept that the Internet is a major medium that the traditional media companies need to master," Gens said. "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."

Now that AOL can prominently feature Time-Warner's content and send it at high-speed to the 20 million homes passed by Time-Warner cable systems, just having a portal or a CBS Marketwatch looks measly in comparison.

"I think other content-based media companies will be looking hard at how to increase their Internet distribution and presence," said Ed Hatch of SG Cowen Securities.

A big potential target for the traditional media companies is Excite@Home, which is already building a subscriber base for delivering the Internet over cable lines.

Will Yahoo Be Next

The spotlight also has turned to 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."

The deal casts into doubt the assumption that traditional media companies will be acquiring Internet companies.

With AOL taking over Time Warner -- the world's biggest entertainment company -- the hunter has become the prey.

"Yahoo and Microsoft will now be looked at as acquirers and media companies as targets," said a high-ranking executive at a Time-Warner rival. "That will put pressure on media companies to build up their defenses and beef up their market value."

Other big portals -- such as Lycos and Altavista-- also are going to feel the heat. Even though Wall Street last year gave a thumbs down a potential merger between Lycos and the USA Networks, the portals are seen as potential merger candidates.

Analysts said portals will have to start making serious deals with cable operators or ally themselves with telephone-based broadband technologies such as DSL or ISDN.

"If you're Yahoo or Lycos, as DSL becomes more available, there may be a lot of discussions," said SG Cowen's Hatch.

The portals could just sit on the sidelines and stay out of the distribution business altogether, but that could be fatal if their competitors get in the game.

If the other portals do choose to follow AOL and go with cable, don't be surprised if Yahoo or CMGI -- which owns 15 percent of Lycos and a majority of Altavista -- try to buy cable operators.

All of which means a goldmine for big cable operators like Cablevision, Comcast, AT&T;, Cox and MediaOne.

With AOL saying cable is going to be its high-speed delivery option -- at least for the medium term, cable companies -- are suddenly very valuable.

An Unusual Market

"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

—The New York Post contributed to this report