Here's what I've been saying all along:
When word of the movie first broke out, it was 2007... maybe even earlier. And these days everyone expects a movie to jump from the idea stage to the development stage within a couple months. And I feel Hit was thinking the same way. When the movie was first announced, everyone thought that it would have been released by 2009. So much misfortune hit the film, the writer's strike helped keep it down, now the nonsense with Weinstine losing money... that even if it does happen, it could be 2011 or 2012 for it to be released. At the time, Hit was partnering with Henson, and I swear they kept the partnership going for promises of the movie. The second season set once had "A Behind the scenes look at the new film" as one of the possible bonus features.
But 2008 rolled around and there was no real direction in terms of pre-production )other than countless script rewrites), and Hit's partnership licensing was about to expire. Realizing they weren't going to get a share of the movie and too lazy to care about renewing the deal, they slapped the last box set, which they only released as a complete series set at the time, together as cheaply and as speedily as they could. The Red thing wasn't going to happen, and they just said "see yah" to Henson.
That said, why the heck they don;t hype everything up with new Fraggle youtube videos is beyond me. Look how Bohemian Rhapsody and all the other virmups did with the Muppets. Surely, a Fraggle Rock web video series would do the same, and drive up business from movie studios who somehow can't think of anything original on their own, but can't bring themselves to fund an FR movie. I dunno about you, but a Traveling Matt viral series where he talks to actual people and explores the world of the "Silly Creatures" would be a lot better than the same lame viral videos and memes that choke up YT.