Murdoch did get an amazing deal.
Revenues are meaningless. MySpace last reported a profit in 2007, of $10 mil on $550 mil in revenue.
http://www.zdnet.com/blog/btl/fox-interactive-turns-annual-p...
Facebook then proceeded to eat MySpace's lunch.
August 2010 article about how News Corp. may never profit from MySpace:
http://www.bnet.com/blog/advertising-business/news-corp-may-...
MySpace's current market value is nowhere close to the $5 billion you claim. It has been hemorrhaging market share to Facebook for years.
Just check out the graphs.
http://www.alexa.com/siteinfo/myspace.com
Steady drop toward zero.
No-one's disputing that Facebook are beating MySpace, but saying they're worthless is like saying Pepsi are worthless because they're not Coke.
At the revenue levels they're at and at the size of their employee base, they could easily cut costs and make back that 327 million in a single year (at the cost of long term growth). Regardless if you think they're worth 1 billion or 5 billion, they're clearly worth more than worth Murdoch paid for it.
He could sell tomorrow for the price he paid for it and have private equity buyers bite his hand off.
In order for something to be worth anything at all, it needs a buyer willing to agree to that number.
I'm not sure MySpace has such an optimist.
I'm sure they aren't either, but every bubble in history wasn't caused by people being sensible.
Both Facebook and Twitter are in serious bubble positions, just like MySpace and Friendster and pets.com.
The odds are very high that the money will go the same place Murdoch's billions went - down the closest toilet. Let's keep in mind that people thought Rupert got a sweet hart - even criminal - deal with MySpace at the time. In hindsight he looks like an idiot.
When the company in question has no reasonably identifiable income stream and stratospheric valuations, it's best to stay far, far away.