I don't know their actual hacking mechanism, but a replay attack could be done such that valid but incorrect GPS data is sent to the drone. The gist of it is that one records signals coming from GPS satellites and retransmits them. It could be transmitted with enough power to drown out any signal from actual GPS satellites.
There should be a time component in the signal that wouldn't match the internal clock, but maybe enough satellites saying the same thing would trigger a self correction... or it would disregard all GPS data.
Yep:
"Radio waves are electromagnetic energy, which means they travel at the speed of light (about 186,000 miles per second, 300,000 km per second in a vacuum). The receiver can figure out how far the signal has traveled by timing how long it took the signal to arrive." -
http://electronics.howstuffworks.com/gadgets/travel/gps2.htm
There should be a time component in the signal that wouldn't match the internal clock, but maybe enough satellites saying the same thing would trigger a self correction... or it would disregard all GPS data.