But that's the thing: in most home theatre setups, you're never even exposed to the UI of your television. It stays locked on one input permanently (the input from your AV receiver), you're not adjusting settings after the initial setup, you're not using it to change channels or volume or mute... The interfaces that you're going to interact with will be from your TV service box, your game consoles, your streaming box, etc.
So what is the TV other than a passive display to display the output of other devices?
Maybe that's the problem that Apple was seeking to solve. My guess is that was their aim but got scared about trying to compete with the cable providers and content cartel. I think Jobs would have pushed forward regardless and been proven right, but the Harvard MBAs currently in charge would never take that kind of risk. Which is why Apple's market cap is 1/4 of what it was 2 years ago and that trend is likely to continue unless the watch becomes the type of must have accessory the smartphones became. I seriously doubt that and think the watch will be an exercise accessory and that's about it. Apple should think about starting a bank to take care of that giant pile of cash they have. Might be the best ROI opportunity they have left.