The problem is that, the way the preferred is set up, is that it is assumed that if 2/3 of the holders are comfortable with something, it must be okay for all of the holders. I don't think the indenture for the preferred really envisioned that the price would collapse in the market, a bunch of new investors would end up buying a ton of it for a fraction of face, and end up selling it back to the company.
The board has a fiduciary duty to the entire shareholder base. The notion that one can balance out "common" vs. "preferred," is very difficult, when, in my opinion, the interest of the common holders CONFLICTS with that of the preferred. How that is resolved is beyond me. I guess it just comes down to treating the pfd. shareholders "fairly." But is a preferred holder who wants to keep his shares, and eventually claim face plus accrued dividends being realistic...when the indenture clearly states that if 2/3 of preferred holders support it, Emmis can stick the preferred holders priority status behind ANY other new class of stock (among other actions they could take if they control 2/3).
In one sense, your beef should be with the 60% or so of pfd. holders, that were willing to sell back to the company at about 25% of their theoretical claim. Why was no one else available, in the open market, to buy out their claim from them, and defend that claim? The fact that no one was, might very well be "ominous" for the remaining preferred holders.
It seems like the pfd. stock is a "dying" security...which is why, like you, I sold out my position, in the open market, a day or two ago.