From a former Google Reader project manager.
Let’s be clear that this has nothing to do with revenue vs operating costs. Reader never made money directly (though you could maybe attribute some of Feedburner and AdSense for Feeds usage to it), and it wasn’t the goal of the product.
Reader has been fighting for approval/survival at Google since long before I was a PM for the product. I’m pretty sure Reader was threatened with de-staffing at least three times before it actually happened. It was often for some reason related to social:
2008 – let’s pull the team off to build OpenSocial
2009 – let’s pull the team off to build Buzz
2010 – let’s pull the team off to build Google+
It turns out they decided to kill it anyway in 2010, even though most of the engineers opted against joining G+. Ironically, I think the reason Google always wanted to pull the Reader team off to build these other social products was that the Reader team actually understood social (and tried a lot of experiments over the years that informed the larger social features at the company). Reader’s social features also evolved very organically in response to users, instead of being designed top-down like some of Google’s other efforts.
I suspect that it survived for some time after being put into maintenance because they believed it could still be a useful source of content into G+. Reader users were always voracious consumers of content, and many of them filtered and shared a great deal of it.