Roddy,
Very insightful, as always. Respectfully, I have to disagree. I just really think moving C&R to AM drive is the definition of throwing good money after bad. It seems like you don't agree but, essentially, if you move them to mornings you are now rebuilding 2 dayparts, with no guarantee that what the do in afternoons will even translate into mornings. And, we know that they bill successfully, and, right now, I can't imagine justifying taking a risk on the biggest moneymaker on air for you, given these economic times.
So, strictly from a business perspective, you have to look at the risk reward.
Scenario #1, you move C&R to mornings and put someone steady or recognizable on PM drive. So, C&R are now head to head with the 400 lb gorilla, The Bert Show, as opposed to the afternoons when they are head to head with, well, no one. In the afternoons, you just went from a talk intensive, personality based show to a more tradition jock & songs set-up. The risk: Maybe C&R take some share from Bert and catch a little of the older set, or maybe they get slaughtered. In afternoons, obviously people that listen to C&R are listening because the like to banter, and you just changed that setup, so you run the risk of losing a lot of that share as well, not to mention, maybe advertisers stay on afternoons, or maybe the shift to morning. Maybe they wait and see because we know how much advertisers like change.

But, then, if C&R fail in the AM drive, you've ruined their brand and completely lost that revenue. But, if the move works, C&R bill roughly the same they billed in afternoon, and you have to figure out a way to redevelop the PM drive revenue stream.
Scenario #2, leave C&R be and find something new in the morning that is more focused on an older crowd, say, the happy medium between Bert and S&V. In this situation, C&R continue along being the stable and billing part of the day, and you have a chance for the AM drive to develop. Now, same situation, AM drive fails. The difference is, you haven't killed the golden goose (at the moment), and you can try again. Also, if the new AM drive show does well, you can potentially boost C&R in the afternoons.
I probably rambled, but the gist is, normally you take risks because there is a greater reward. In this scenario, I think the more risky decision (upending C&R) has much less upside (they bill about the same and you get an average amount of cash flow from PM drive). On the other hand, the safer decision (leave C&R alone and get a new AM drive show) has a TON more upside (C&R do what they do, and you have a chance for a good morning show to happen and they begin to generate a good revenue stream)
Anyway, that is my two cents. I would love to hear your take.