This is how I understand it: the 3 main alternatives for the author were:
Do nothing and comply with DC shenanigans.
Try to fight (legally) DC.
Make it public domain.
None of them are ideal and, although (from what I understand… IANAL) you are right that with the 3rd one DC can do whathever they want, companies don’t like when anyone can make any kind (gore, porn, furry porn…) of fanart with their products. If Fables ends up being identified with not-safe-for-monetization stuff, it could be dangerous for them. Imagine the possible “won’t somebody please think of the children?” juicy headlines about it.
But I think the main reason is that this makes it a problem only for DC instead of it being a problem for the author.
EDIT: As pointed in other comments, they would also loose the exclusivity over the product and merchandising. They would need to compete with very cheap legal-knockoffs.
This is how I understand it: the 3 main alternatives for the author were:
None of them are ideal and, although (from what I understand… IANAL) you are right that with the 3rd one DC can do whathever they want, companies don’t like when anyone can make any kind (gore, porn, furry porn…) of fanart with their products. If Fables ends up being identified with not-safe-for-monetization stuff, it could be dangerous for them. Imagine the possible “won’t somebody please think of the children?” juicy headlines about it.
But I think the main reason is that this makes it a problem only for DC instead of it being a problem for the author.
EDIT: As pointed in other comments, they would also loose the exclusivity over the product and merchandising. They would need to compete with very cheap legal-knockoffs.