Rupert to the rescue? Probably not

News Corp. is in talks with Yahoo about a possible combination. But is the deal real, or just a game?

Does News Corp. really want a piece of Yahoo?

Word leaked out Wednesday that Rupert Murdoch’s News Corp. (NWS) is looking at taking a stake of 20 percent or more in Yahoo in exchange for MySpace, some cash and other online properties. An infusion from News Corp., the reasoning goes, could boost Yahoo’s stock price high enough to outstrip Microsoft’s (MSFT) hostile takeover attempt.

This is probably as close as Yahoo (YHOO) will get to a white knight scenario where someone saves the company from the clutches of Microsoft. But a News Corp. deal probably won’t happen.

Why?

First, because Yahoo and News Corp. would have to convince Yahoo shareholders that the abstract deal is worth more than the cold hard cash Microsoft is offering. Second, because it’s not clear who would run the MyHoo combination. Third, because there’s a good chance that News Corp. is more interested in peeking at Yahoo’s secrets at the bargaining table than in actually stealing Microsoft’s prize.

Let’s start with the value question. Convincing Yahoo shareholders to embrace a MySpace deal would be difficult enough, because it would assume that MySpace is worth billions of dollars. According to The Wall Street Journal, News Corp. would likely push for a valuation between $6 billion and $10 billion. Based on what? Not much, actually.

Much of MySpace’s revenue comes from its $900 million advertising deal with Google (GOOG), in which the online giant has agreed to pay about $20 million per month until mid-2010. So far, that deal doesn’t seem to be working out so well for Google. In its most recent conference call with analysts, Google blamed its disappointing performance in part on its inability to make the MySpace deal pay off as quickly as it would like. That makes it doubtful that MySpace is really worth billions today. And if investors don’t believe in the value of MySpace, they won’t believe that this deal makes Yahoo more valuable than the more than $40 billion in cash and stock Microsoft is offering.

Then there’s the management issue. Even if Yahoo shareholders agreed that MySpace is worth billions, who would they trust to run the company? Not Yahoo CEO Jerry Yang. As recently as October, investors had bid up Yahoo’s stock as high as $34 per share — well above Microsoft’s current offer — hoping that Yang would deliver on his promise to clean house at Yahoo and set clear priorities at the dithering company. When he didn’t, the stock fell to earth, and Microsoft pounced on the opportunity.

If shareholders didn’t trust Yang to clean up Yahoo, would they trust him to both do that and integrate MySpace at the same time? Of course not. Sure, News Corp. could always suggest new management from its own ranks, but that would be awkward. Since Google handles online ads for MySpace and Microsoft handles ads for The Wall Street Journal Online, News Corp. would essentially have to go to war with a business partner.

Finally there’s the strong possibility that News Corp. doesn’t really want to do a Yahoo deal at all, and is only dangling the MySpace idea as a way to gain information.

After all, as a media baron who has struck big deals with both Google and Microsoft, Rupert Murdoch stands to be affected quite a bit if there’s a power shift in online advertising. There’s arguably no better way to prepare for the changes than to get an up-close look at what Microsoft would get by purchasing Yahoo — and that’s perspective Murdoch would be likely to get if he at least pretends to be interested in taking a stake in Yahoo.

A source with knowledge of News Corp.’s strategic thinking told Fortune this week that News Corp. executives aren’t sure whether a Yahoo-Microsoft combination would be good or bad for its own business. You can bet Murdoch & Co. are itching to find out.