They either trusted in the people that store films to do it well and they didn't really or they simply didn't percieve that there would be such high quality formats for the movies to be released on in a way that deterioration was so evident. That and maybe they thought our restoration techniques would be even further advanced to not make it a problem.
But in all seriousness, the companies that release these sub-par versions of important films rely on the average consumers ignorance and over-tolerance to these problems so that they can be out in time for whatever reason. Or maybe they just assume it'll come out later again and they can fix shit then.
But goddamnit, if they can fix "The Wizard of..." fucking "...Oz" to look damn near like it was filmed decades later at least then you think they'd try harder on other historically significant films. Maybe leave it up to people that care like the WoO people prolly did.