Northern Arizona being in the Phoenix DMA is a problem, not an asset. Flagstaff needs its own media for NAU to thrive. Phoenix is 140 miles away, and the Pac-10 schools have college ownership in a market that has at least one too many teams in Big 4 professional leagues. You could mention the burgs of Sedona, Cottonwood, and Prescott being part of the possible market (and there is a cable presence of Northern Arizona "media", sort of), and with the growth in that general area, that COULD develop. Maybe. I'm not holding my breath.
With respect I disagree. Putting aside for a moment whether such a thing might occur, I think Flagstaff metro is 127K. Prescott Metro is about 212K. I have to think all told the division that you are talking about would not be more than maybe 400k people. That is probably much less than 200K TV households. For the WAC, that is insignifigant in TV terms and would not offset the travel costs to AZ. NAU may never capture the hearts of Pheonix, but being in that enormous DMA makes them potentially very attractive to a conference that is hurting for TV Households to claim.
Looking at a map, NAU is IMO darned lucky to be in the Pheonix DMA, because if they weren't, they would be considered too far west for a Texas based SWC-lite type conference and too far south for a future California leaning WAC. NAU adds a lot of distance to either potential group. They really are a little like NMSU in that regard.