Even if the majority of that community gets their news and entertainment from their phones? Remember, Asia has been WAY ahead of the U.S. in relying on smartphones for all things of use. Can't disagree with you more that somehow the terrible quality of an AM station would be more appealing. Especially true for anyone under 50.
I'd rather go to battle with a limited FM signal, than a terrible-sounding AM signal any day. KUOW is a great example. To many South, East, and West of downtown Seattle, KUOW doesn't have a great signal as compared with Cougar or W. Tiger. But that doesn't seem to matter, because KUOW does very well.
No young people listen to AM, period. So, there goes any future growth. Now add in the stark, noticeably inferior audio quality of an AM station, and I can't think of any example that an audience would find appealing. As I mentioned prior; sure there may well be someone who thinks owning a derelict AM station is a way to give back to the community, but would probably change their mind when having to struggle for advertising dollars, or they eventually run out of money.