Feeding the hype machine that generates donations is considered more important than the work (not to mention the truth-seeking function of academia) the donations are supposed to fund.
There needs to be some serious house-cleaning if they want to be considered an actual research lab of any repute. Ito was a problem, but he quite clearly was not the only one.
What academia should not be divorced from is knowledge and truth seeking. I don't mean that in some wooly, idealistic sense: if that isn't the focus, you're hucksters and frauds, not academics.
[ETA: a large number of media lab projects are still really good, as the other commenter mentioned]
At least one other major project, the OLPC from media lab and the infamous Negroponte gang was a total failure. Negroponte was back in the news recently due to the whole Joi Ito-Jeffrey Epstein pedo funding debacle.
Or most of the rest of the stuff from that group: http://cameraculture.media.mit.edu/research/