By not firing him outright (or at least demoting him to "perpetual sabbatical"), the university is agreeing with his tripe. There's no other way to look at it.
I am assuming that this peckerwood is protected by tenure. The university would have a hard time firing him if he was convicted of almost any felony.
The concept of tenure was put in place to protect the right of free speech for professor's who might say something in dissent of any given issue. It is a broad based and very powerful system, and guys like Churchill know it. That's why they're not afraid to make statements as asinine as the statement Churchill made.
What's the solution? Damned if I know. Someone suggested tar and feathers, rotten apples, etc. My own personal method would be to make sure that my child is not enrolled in any of his classes. If no students showed up for Churchill's lectures, he would have a hard time "learning" anyone anything.