Basically Chuck, in accordance with the Investment Agreement & Shareholder Rights Plan, Liberty Media is barred from entering into any hedging transactions until January 1, 2010 . . . commencing on January 1, 2010 Liberty Media is permitted to short the common against their preferred shares.
As I understand it, and someone please correct me if I'm wrong, the premise is the same as with the convertible bonds wherein the holder of the bonds shorts the common to lock-in their return.
In this case, the holder of the "Preferreds" shorts the common to lock in THEIR returns . . .
As to the impact to share price going forward . . too many variables at play to predict with any degree of certainty . . it is, however, a wildcard that should be considered in any investment decision regarding this equity.
Put yourself in the shoes of Liberty Media for a moment and ask what is best for you . . . and remember, you can make a "cash tender offer for all shares not beneficially owned by you after February 2011" . . .