While the advertising was kept in place, it still doesn't attract the rates that normal television does. Given a choice, content holders definitely prefer viewers to tune into ordinary broadcast television to watch their shows - online content is about capturing the potion of viewers who miss shows and don't watch broadcast television.
With Boxee, there is the potential that the online content will cut into the broadcast TV audience - hence this decision.
What is interesting is that the true motives are now more obvious. Online content, in the form of both iTunes and Hulu, is fine as long as it doesn't cut too close to the broadcast base.
Content holders have gone from vigorously defending their network broadcasts to now accepting online content, but only to a point. The next battle will take place when more intelligent PC-like DVR's come out on the market (like the PS3, but at a $100-150 price point) allowing viewers to easily stream online content to a television with a remote. The content owners have a short time window between now and then where they have the best of both worlds - both broadcast and online, but once it all goes online the very lucrative and protected broadcast market will be threatened.
With online, there is no more having to acquire broadcast licenses, no more large-scale infrastructure networks to reach your potential audience and no longer limited competition and cable monopolies with packaged channel selection.