I was under the impression that Wizards of the Coast has been quite profitable since the 90s with M:tG. Can you point me towards some information they were having those problems?
Dungeons and Dragons wasn't having problems in 2006, it simply wasn't a big enough market to justify and large expenditures at the corporate level. It was profitable because Hasbro controlled how much money they spent on it.
Here's Hasbro's financial report from 2006: https://www.annualreports.com/HostedData/AnnualReportArchive/h/NYSE_HAS_2006.pdf
Note that D&D is mentioned a total of 3 times, and the only time it's more than an also-ran with Magic The Gathering is in reference to selling it's computer game rights. Brands that get more attention in the annual report include the Game of Life, Furreal Friends, and the Tooth Tunes line of musical toothbrushes. D&D may be getting bigger now, but it was a niche hobby for years.