I understand syndication but I don't understand what that has to do with cancellation? Did Hasbro just want to meet the minimum episode requirement and then just kill it ehilebit has a syndicated cash cow?
Basically, 13 episodes (once a week for a season) is a valid syndication package. 26 episodes is a better package. 52 episodes (once a week for a year) is an even better package. 65 episodes (five days a week for a season) is the best package. Bonus episodes will always be gladly accepted, but people don't really want to pay anything extra for them.
Disney has a bad habit of letting shows run until 65 and then cutting them down, to maximize value.
The Hub (the Hasbro owned network which airs MLP) has been losing significant money since it was founded, but Hasbro says that they're okay with it, because it's working like advertisement and selling more toys than they did before. Also, Hasbro feels that The Hub is in a "growth" phase and that it will become more profitable once it gets a more established presence, and the only way to establish themselves is to keep making as many winning shows as possible.
MLP and Transformers Prime are/were the biggest successes on The Hub, but they're also among the most expensive shows to produce.
Hasbro executives decided to cut MLP and TFP's season 3 budgets clean in half, so that they could use that money to promote other projects, to increase the wider success of The Hub, and because they felt that MLP and TFP didn't "need" the extra money to stay successful at this point. Also, it makes a clean line at 65 episodes. That is always nice for executives to see.
But apparently Hasbro didn't make their intentions clear towards the producers or anyone involved in making the shows. They thought that Hasbro was going to cancel the shows without telling them. They thought Hasbro was going to coast the shows into 65 episodes, and then move these powerful/expensive shows off The Hub and into syndication, where they could be seen by a wider audience.
So the creative people in charge of MLP and TFP both decided to pack things up and get ready to go home. By the time Hasbro executives realized that their shows were ending, there was nothing they could do to stop it. MLP was able to continue after wrapping up their storylines, TFP was not.
