Even commercial stations are not big business. That's why consolidation has been so successful -- no one was making enough money to hold back the tide. Economies of scale, etc.
But Boston has the absolute best college radio options in the country and probably the world, and each of the five or six excellent stations runs a local music show. They're not always conveniently scheduled, but that's an inescapable problem with broadcast media.
None of these operations would survive in a commercial context, and they'd be even less likely to if they were hyperlocalized. The audience is there but the market is not.
If you're in the same boat, then here's the secret: FM modulators are great. These are the same basic concept as an FM transmitter, except instead of trying to pick up a foolishly low-power station with your radio antenna, it's a direct hard-wired connection from the modulator to your radio's antenna port. Quality is very good (not as good as a CD, but as good as the best FM radio station you'll ever hear) and there's no chance of any interference because it never picks up external signals. Installation can take some work, but it's well worth it.
YMMV, I have a cheap COBY FM Transmitter[1] and it's amazing in my little 2002 Civic XL.