Clue No. 1 is in the news release issued late Wednesday by Meredith, in which chairman and CEO Stephen M. Lacy not only confirms discussions with Time Inc.'s parent company, Time Warner Inc., but admits to remaining "open to continuing a dialogue on how our companies might work together."

Clue No. 2 is in a similarly timed statement from Time Warner, in which it gives convincing reasons "to proceed with plans for the complete legal and structural separation of Time Inc. from Time Warner."

Those reasons, as uttered by Time Warner chairman and CEO Jeff Bewkes, are just what you would expect: Time Warner will achieve "strategic clarity" and an improved "growth profile" by distancing its film and television operations from its shrinking magazine division; Time Inc., in addition to attracting "a more natural stockholder base," will attain heightened "flexibility and focus" by becoming its very own publicly traded standalone.

Most important, though, is what Time Warner left out of its release. It omitted any reference to harboring plans, still, to merge Time Inc. with all or part of Meredith's National Media Group, which includes such powerful magazine brands as Better Homes and Gardens, Family Circle and Ladies' Home Journal.

"Now that Time Warner has announced a spinoff of Time Inc. for good business reasons, other than to facilitate an acquisition, it can argue the spinoff would have occurred regardless of whether a subsequent acquisition takes place," tax expert Robert Willens said.

"What they've done is guarantee any subsequent acquisition, should there be one, will not be seen as part of the plan that included the spinoff."

Both the argument and the appearance of an independent spinoff are designed to placate the Internal Revenue Service. Time Warner is so confident the IRS will allow the spinoff of its magazine division to be tax-free that it said as much -- "the proposed transaction will be structured as tax-free to Time Warner stockholders" -- on committing itself to an independent, publicly traded Time Inc. by the end of the year.

However, for Time Inc. to have benefited from a tax-free spinoff into a new company that also contained assets contributed by Meredith, the IRS would have required shareholders of Time Warner to have owned a majority of the merged entity. This is a mandate of the sort of tax-free transaction, known as a Reverse Morris Trust, that Time Warner had been contemplating with Meredith.

An RMT showed promise as a Time Inc.-Meredith merger vehicle as long as Time Warner was willing to keep four of its 21 magazine titles -- Time, Fortune, Money and Sports Illustrated -- to itself and out of the spunoff entity. But that promise began to fade once Time Warner decided to exit the magazine business in its entirety.

Any inclusion of the four additional titles would have given Time Warner, both in terms of a fair valuation and from the perspective of Meredith's controlling family, too much of a majority. This ostensibly proved the deal breaker once the controlling family, which as a group benefiting from supervoting shares controls more than 50% of Meredith, began to fret over the increased dilution a merger with all of Time Inc. would have created.

What the two parties did instead can almost be seen as an interim step toward the same end that Time Warner had in mind when it approached Meredith months ago about merging all or part of each other's magazine divisions. According to Willens, a merger can still occur -- even "shortly after" Time Inc. becomes a standalone -- only its terms will no longer be restricted by the majority-ownership demands an RMT would have imposed on a comparable deal today.

In fact, the tax expert said, "I'm thinking the merger is just as likely now as it was a couple of days ago."