Au contraire. They are, by your math, being heard by 16K people a week. If this were Des Moines, a station impacting 16K would be part of the buy. Why isn't a station with similar impact in this market relevant to some? By your math 1260 should turn out the lights and shut down. Also, presumably the TSL is greater with this crowd. Also, 0.1/0.7 may not be factoring in the incremental audience also tuning into their HD2 presence (105.1). That's where, anecdotally, I listen to them up and down the 405 corridor.
Sure, your logic suggests that KSUR is not on the radar screen for most mainstream agency buys, but there is enough advertising out there that does target this demo to help 1260 avoid being completely commercial free: pharma buys = yes, cemetery buys = yes (Forest Lawn and Mt. Sinai are often heard on KNX), cruise line buys = yes, upscale auto OEM buys = perhaps. And that's just some initial thinking of applicable verticals.