"AM Radio is doing just fine" if you factor in the top handful of stations in a market. But MOST AM stations in major markets don't have Rush Limbaugh, Sean Hannity, fulltime news or sports, a major team franchise, or any of the things that make that top two or three stations (say six or seven in the biggest markets) successful. My father used to say "a little knowledge is a dangerous thing". That's sure true with radio.
Take Charlotte for instance. Heritage 1110 WBT has monster ratings. So one could assert that "AM is doing great in Charlotte". WRONG! I've heard people from 'BT say numerous times that nothing would be better for them then for someone else, ANYONE ELSE on the AM dial to also do well. It would draw more people to the AM band, and be great for EVERYONE. MOST AM STATIONS ARE NOT "doing great". Most are also-rans, running tiny little minority formats. Audiences are often so small they'd do better to turn the transmitter off, save energy, and just open the windows and turn the studio monitors up LOUD! Some of 'em might even extend their coverage area this way! :'(
AM programmers need to think outside the box. If you think every AM can make it "just fine" with news/talk, then I don't know what market you're in, but I guarantee the ratings sure as hell don't back you up on that. I don't know a market where there are a handful of AMs near the top, and the rest are "bottom feeders". Some actual creativity might well be their ticket OFF THE BOTTOM!
(Relax Dittoheads, I'm not suggesting Limbaugh or Hannity stations change formats. I'm talking about the little guys who DON'T REALLY HAVE AN AUDIENCE!)