There are a few primary reasons I believe that TV ratings for wresting fell on the decline:
1. Forgetting what brought you to the dance...
Creative strorylines that actually have a point and are cohesive enough to make a difference i.e. Austin/Hart, Austin/McMahon, Michaels/Hart as opposed to Katie Vick, Torie Wilson's dad, NWO revival or a myriad of other $hit storylines done during the Gewirtz era. Properly built heat and good payoff matches are what is important. Wrestling doesn't need to be revolutionized offensively most times. A decent booking order with solid matches that progress each time out is the way to go. The disjointed layout of WWE TV booking is disgusting. Matches aren't chosen in a PPV-type order of least to greatest like they used to be. Instead, they are chosen to maintain quarter-hourly ratings and keep sponsors up in all points of the show. This confuses the audience. Hell, I remember seeing the Rock defend his belt on Raw back in the day, and right after that a Val Venis match came on. Someone should have their ass kicked for that. Talk about stifling momentum. Professional wrestling isn't rocket science. Look back at the WCW/WWF wars. It wasn't overtly complex, but they knew what buttons to push on the crowd, and more importantly...when to push them.
2. Not knowing when to switch gears...
Originality and planning for the future is paramount in a constantly evolving beast like the wrestling business. Seeing Hogan and the NWO regurgitated again was probably my first big indicator that McMahon was entirely out of gas at that point. Nothing genuinely fresh has been laid upon the table in recent years that would even remotely denote a continuation of the momentum built by the late 1990's wrestling heyday.
3. Bad choice of top talent...
The prototypical WWE mark fans will typically always eat up the major portions of whatever wrestlers McMahon really gears the marketing machine around. The problem with recent years is that he has been choosing duds. Instead of doing what he used to do, and make sure he has solid workers in the top spots who can actually carry a match past ten minutes (Rock, Austin, Foley, Hart, Michaels, etc.) he has pinned his hopes on a set of one-trick ponies like Cena, Batista, and Lashley. Instead of swimming downstream and getting guys who just need a gimmick adjustment or some more mic training, he gets pretty faces who need wrestling training. This is ass-backwards thinking at its finest. His company is loaded with talent that could be the cornerstone of numerous promotions.
4. Watering down the quality of the matches...
Since the advent of "TV wrestling" during the Monday Night Wars the lengths of most matches have gotten noticeably shorter and the fans in the arenas are now accustomed to watching crap that is too short, badly wrestled, and badly booked. Moves have been banned, and the type of offense executed by the wrestlers is a homogenized style that doesn't allow for a lot of differential between superstars. The creativity and explosiveness that was once a part of WWF programming is gone for the most part.
5. No payoff to proposed mega-angles...
Goldberg/Lesnar, WCW Invasion, NWO, Cena/JBL, Batista/HHH. All the hype that surrounded this stuff was immense. The payoffs were complete crap. Decent angles that were capped off by horrible matches that drew lousy response. How many times do they need to see this happen? When your undercard can generate more heat/pops for their matches than some of your top stars, then it's time to re-evaluate the goddamn batting order. Piss-poor execution of some of the storylines of the last few years and bad choices of which wrestlers to mix or which wrestlers they pushed has killed a lot of the steam that once powered the WWF. The belts are near-worthless by comparison to days of past.