Well I just saw the news about this, and I can't say I'm at all surprised. The ratings have never been spectacular, they've never been able to capture the magic of the old K-Rock days (most of which was sustained by Stern's show anyway), and my guess is that they figure the billings will still be good enough simulcasting the news station.
I'm far more interested in what happens with 880 now that they've also made the anchors and reporters "interchangeable". That really sounds like they're going to eventually downsize from two news stations to one. I wonder if there are some future plans for 880 to be more of an extension of WFAN to better broadcast multiple games when they're on at the same time (like when the Yankees and Giants play and they put one team on the FM and one on the AM) or maybe fit in some of the talk shows when games are on. Just something that feels like would eventually make sense.