The cancellation was an overreaction. The show was written and directed by gay men, and had many gay folks in their cast; plus, the company is *extremely* gay-friendly, having granted insurance to employees in same-sex relationships before any other studio (in 1998). While the show may have been crass and distasteful -- it has been like that for nearly 20 years, it's quite literally the *signature* of the show. There's even an announcement about that before the show starts. It's also not a daily show, just at Halloween -- an event that also has an interactive Chucky puppet that tells guests he fucked their mom and to suck his dick. The article was shrill and out of context. If you didn't see the show yourself, the article doesn't paint a correct picture of the humor. Find it distasteful all you want, but racist and homophobic it wasn't, and has never been. Universal's cancellation sets a really dumb, bad precedent.
I am gay and have watched the show for years. It's crass, but an equal-opportunity offender IMHO.