Couldn't be further from the truth. Insight paid a very minimal fee ($15000 according to the Board of Control recorded minutes I asked to see) for the rights to do the four football games, AND the finals of the boys and girls basketball tournament. That's less than $3000 per game for the six games to the KHSAA so that certainly has nothing to do with attendance. Statistics show that live TV DOES in fact hurt attendance, but not as much as people have thought over the years. Think about the weather this year at the football finals.... Also, though, unless it is U of L, Kansas, North Carolina, etc., how often is Rupp really full? That's because you can see nearly every game on some type of live TV.
The losing money hand over fist is probably true, but not because of the KHSAA. The costs of renting satellite trucks, camera crews, technical crews (it took 12 paid individuals this year just to do the scoreboard video and that wasn't even on TV, so you can imagine how many more people are needed for TV) is much greater than the costs involved with a minimal rights fee. It's just an expensive proposition and Insight made an early business decision (coincidentally right after the introduction of Proposal 20 to split the association) to not broadcast this year in any of the three tournaments. Probably felt that it would be a tough sell but who knows.
As for going up every year, the original contract when Insight announced it last year, fixed the fee at 15 for three years. Insight made a business decision, this one just turned out not to be the best one.