He became a liability when he alienated his employer's customers. You and I may think PC has gone too far, but MSNBC is in business to make money. When an employee damages their ability to do so, they must respond by firing him/her.
I thought I heard today that the majority of his listeners did not think it was as big a deal as the PC crowd (Sharpton, etc.) were making it out to be. I agree that a business has the right to make these sort of decisions because they are, afterall, trying to be profitable. I just don't believe that he would have been fired if the PC/hypocritical talking heads hadn't freaked out....which caused sponsors to get nervous and pull the plug.