I think in terms of good business, it has to come down to the bottom line, eventually.
How long was Don at Samhain for? If they gave that approach to business a reasonable amount of time to work (and things move pretty fast in e-publishing) and they were still losing money or not selling books, then they have to make a change. Right?
And, honestly, if they actually fired this guy? It sounds like it's because he refused to do what they asked him to do. So they said something like "we need you to have a more active social media presence because that's part of our marketing plan, and the current marketing plan isn't working" and he said something like "no". Which is not really something most employees can say to their employers without consequences.
I think we tend to use different standards when we're judging publishers and other organizations engaged in "artistic" pursuits. But publishers are still businesses. Sure, they should be socially responsible, but they still have to make money or they'll be in big trouble, and so will the people they've signed contracts with. As a Samhain author, I'm pleased to see them looking after the bottom line and making decisions they think are in the best interest of their company, because as an EC author, I've seen what happens when owners make decisions based on emotion and ignoring financial reality.
Was this the right decision? I'm really not sure - I don't have the insider information I'd need to even begin to have an opinion, and I don't have the years (decades?) of experience as a publisher that would help me make a wise decision. But overall? Publishing is a business, not a clubhouse. It's great this guy was popular with authors, but if his line wasn't making money, something had to change, and if he didn't want to be part of the change, then I guess he was the change.