A big thing that ruined B&T was actually the pace of media. In it’s prime, they could write a script in July-August, based on auditions featuring media bits from March-June, confident those cultural references would remain timely until November. Now? A meme or major news story is viral for a couple of days and then forgotten. That kept the script, and the characters it used, from being able to be relevant because Universal understood it wouldn’t be relevant. And that, frankly, cut a lot of the show’s magic off at the knees.
The legal concerns absolutely impacted the event, but that was a concern for years. Jack Sparrow was one character that caused numerous headaches, and the infamous Lex Luther/Dr. Evil switch out was to avoid legal concerns. But, ultimately, it got to the point where writing a show parodying pop-culture weeks in advance couldn’t keep up with pop-culture anymore.