Conclusion: Vidnet would earn greater profits overall if it replaced Starlight with a show of average popularity and production costs.

We are talking about only Vidnet - its shows, its profit and its highest rated show. We conclude that Vidnet would earn greater profits overall if Starlight (whose profits are expected to fall below average) is replaced by an average profit show for next year. "Greater profits" than what? Than what it would earn if it did not replace Starlight next year.

It makes sense, right? If you replace a below average profit element with average profit element, the total profit will be higher. After all, Starlight will earn less than avg profit next year.
But we need to weaken this. We need to show that if you replace Starlight with some avg profit show, the overall profit next year may not be greater than if you keep Starlight for next year too.

(A) The average profits of Vidnet shows have increased in each of the last three years.

Doesn't matter.

(B) Shows that occupy time slots immediately before and after very popular shows tend to have far more viewers that they otherwise would.

Correct. This tells us that Starlight's success spills over to the shows before and after it too. So if Starlight is taken off, not only that slot but profit on slots before and after it will suffer too. Then would you have more profit by keeping Starlight or replacing Starlight, we don't know.

(C) Starlight currently has the highest production costs of all Vidnet shows.

Irrelevant.

(D) Last year Vidnet lost money on a weekly show that was substantially similar to Starlight and was broadcast on a different day from Starlight.

Irrelevant.

(E) Even if, as a result of increased production costs, Starlight becomes less profitable than the average for Vidnet shows, it will still be more profitable than the average for television shows of all networks combined.

This is irrelevant too. Note that we are comparing "Vidnet's profits without Starlight next year" with "Vidnet's profits with Starlight next year". Whether Vidnet's shows are more profitable than those of other networks is irrelevant.

Answer (B)