Absolutely profitability matters. "The View" (etc.) is cheaper than a soap (network to network comparison). But Donahue, let's say, cost-adjusted for inflation, isn't going to cost a lot more production wise than Springer. Game shows of the past weren't always terribly expensive, all things considered, with lower payouts (after the quiz scandals) for the most part.
The cycle was in some ways inevitable with the rise of technology. Want news in the daytime? There's a channel (or more) for that. Ditto sports. Movies. And those that filled their schedules with off-net reruns. Once on-demand viewing became a reality, that rolling stone just kept gaining momentum.
The pie would inevitably be sliced more ways, necessitating lower-cost content. But "cheap" and "trashy" aren't intrinsically synonymous. The success of the early entrants in the game of outrageousness gave way to more copycats. And, in fairness, some of the top syndicated shows still harken back to the celebrity interview shows of old--Ellen or Live with Kelly & Ryan are not all that dissimilar from Merv and Mike back in the day, in terms of offering friendly non-confontrational chat with celebrities with something to hawk.
The "trash" shows sell advertising, sure, but you tend to see more (not exclusively, but more) upper-tier advertisers in those Ellen/Live type syndicated shows and more slip-and-fall and bogus career training spots in the Springer-eque shows. The thinning of the herd of soaps may have been what enabled the survivors to live on as long as they have (and their day of reckoning will come--it always does). Even Price is Right, under Drew Carey, has a better mix of advertisers now--fewer of the direct response for those at death's door (though they still show up), and more for people in the "under dead" demographic.