The America Online-Time Warner merger is an eye-opener, and not just because it will create a $350 million corporate behemoth. The real significance of the deal, which must be approved by U.S. regulators, is that it promises to transform media in the United States and will trigger change in the rest of the world, too. If all goes according to plan, this merger will yield the "all-in-one" media conglomerate that finally delivers on the promise of the broadband multimedia world.

The numbers are impressive. If it goes through, the deal will be the biggest corporate merger ever, and the resulting company will be the fourth-biggest in the U.S. The stock swap values the two companies at about $183 billion. (After the market's initial euphoria at the announcement, share prices dropped, however, shaving $28 billion off the deal.) The new company will have $40 billion in revenues and $10 billion in gross profits. By offering Time Warner shareholders 1.5 shares of the new company for each share they currently own, AOL has effectively paid them a 70 percent premium. That is steep -- nearly $100 billion in good will -- but it is yet another victory for the "new media" companies and their paper-based wealth: Time Inc., founded in 1923, was the first weekly newsmagazine in the U.S. AOL is just 16 years old, but during that short life, it has grown from an outpost for computer geeks to a world leader on the Internet.

This melding of old and new companies has been long anticipated, but a simple practical matter has kept deals from being consummated: Finding a common way to value the two worlds has been difficult. Old companies use traditional measures of assets and liabilities to assess their worth; the new media use future earnings projections, and that is often pure conjecture, rather than hard numbers. There has been precious little overlap between the two -- until now. This deal sets a benchmark for future mergers, and analysts are already picking out who the next likely takeover targets are.