The biggest corporate merger yet seen, between Time Warner and the Internet provider America Online, will create a powerful new provider of information, telecommunications services and home entertainment for the digital age.
This merger of "old media and new media", creating a group valued at $335 billion, was an amazingly well-kept secret. It will give Internet users around the world vastly increased access to entertainment and news outlets, at much faster speed than at present, and is likely to spur further mergers and alliances.
The downloading of music, videos and films from the Time Warner outlets could become up to 100 times faster than the present system of telephone line and modem for Internet users when AOL switches to the high-speed systems used by cable companies.
AOL is offering $166 billion of its shares to buy Time Warner in the huge corporate deal.
Up to now, the biggest US deal was the proposed $122 billion acquisition of Sprint by MCI WorldCom. The biggest pending deal is the $150 billion hostile bid by Britain's Vodafone for the German telecommunications company Mannesmann.
The president of Time Warner, Mr Richard Parsons, described the merger as a "pivotal moment in the unfolding of the Internet age". The head of AOL, Mr Steve Case, said: "This is a historic moment in which new media has truly come of age."
AOL Time Warner will bring together such Time Warner products as Time, Fortune, People and Sports Illustrated magazines, CNN cable news network and Warner Bros films with America Online's AOL, Compuserve and Netscape, which are used by most US users of the Internet as well as by increasing numbers in Europe.
Mr Case, who will become chairman of the new media giant, commented: "By joining forces with Time Warner, we will fundamentally change the way people get information, communicate with others, buy products and are entertained."
"We will draw on one another's strengths, combining AOL's superior distribution capacity and Internet expertise with Time Warner's programming and cable network assets", Mr Case said.
The merger has been approved by the boards of Time Warner and AOL, but will have to be cleared by the US regulatory authorities.
Time Warner was created by a 1990 merger of the magazine and film companies. AOL was founded in 1985 and is a leader in the Internet industry.
AOL has established an international technology centre in Dublin to develop Internet services for the European market. It also operates a call centre in Waterford in a joint venture with the German firm Bertlesmann.
Mr Ted Turner, whose CNN cable news company joined up with Time Warner several years ago, has also hailed the merger.