It WASN'T ready for production... at least not in the way 343 wanted it to be. Halo 4 plays a lot more fast and loose than its older cousins when it comes to fleshing out the world outside the player's grasp - and Theater Mode would have made this abundantly clear. I don't have any inside information, but it seems pretty clear that it was cut because the 'behind-the-scenes' part of the game world was far more incomplete than it's been in any other Halo title, and they really didn't need this being broadcast with every campaign vid.

It clearly works, though.