Sorry, Barnes & Noble (NYSE: BKS) shareholders, but it looks like Liberty Media (Nasdaq: LCAPA) won't be buying your shares for $17. Investors are largely disappointed with the move, with shares losing 17% on Friday.

We saw this coming, but now it's official. Instead, Liberty Media has invested $204 million in B&N through the purchase of newly issued convertible preferred stock. The preferred shares are convertible into approximately 12 million shares at a conversion price of $17 per share, and carry a hefty 7.75% annual dividend. If converted, the stake would represent a 16.6% ownership in the company.

Additionally, Liberty Media CEO Gregory Maffei and Senior Vice President Mark Carleton will join B&N's board of directors. The agreement will reinforce the company's balance sheet; its cash balance had fallen to $59.4 million as of its latest report.

Reuters added some additional context to the discussions, saying that the two sides couldn't agree on how to value the Nook amid recent market volatility. The Nook is B&N's only bright spot, driving the company's growing digital sales. The company's B&N.com segment, which includes the development and support of the Nook offerings, reported strong comparable-store sales of 64.7% and 24% over the past two years, in stark contrast to the uninspiring comps at the brick-and-mortar locations.

Ironically, the digital segment is also driving the company's operating losses as it reinvests heavily, banking on future growth. Last year, the $232.5 million operating loss generated by B&N.com outweighed the combined $167.3 million operating profit produced by the traditional retail and college segments.

I'll admit that the Android-powered Nook is doing better than I expected it to when it was first introduced, although I remain bearish on its long-term prospects against Amazon.com's (Nasdaq: AMZN) Kindle, especially considering that Amazon will be entering the Android tablet market soon. Barnes & Noble has a lot riding on the Nook -- maybe a little too much. Liberty Media's experience in electronic retailing and digital content distribution will definitely come in handy and benefit B&N. So will that $204 million.