Producing entertainment product has a certain amount of risk. And this is the most expensive television series ever produced. Now if you are arguing that it is SMART to spend that much money on a product that only is seen as average at best by audiences then you are insane and there is no point even trying to discuss any thing further with you because you lack common sense. There is no magic to this. Either you spent all that money and get a return on investment, in the form of a very successful series, or you don't. Whether you like the show or not doesn't change the financial reality at play. And like I said, that also doesn't change the fact that the Tolkien Estate found a way to generate more cash for themselves, because new LOTR moves aren't going to be made any time soon, so they found a loophole to get some cash from a studio buying the rights and producing a multi season television series. Because the only money they get off those movies is as a percentage on the profits. That is just a fact.
The rights that Tolkien sold were owned by the Saul Zaentz company and those rights have now been sold to the Embracer group. Those rights were not owned by the Tolkien Estate. So the Tolkien Estate, in selling these limited TV rights, directly received the money for the purchase of those rights and any potential profits based on the terms of the contract.... That is totally separate from the rights already purchased from Tolkien long ago. That is the part you are probably missing. So it is ultimately the Tolkien society that pushed this deal in order to produce something that is very risky for any studio willing to take it on. And because they have so much leeway in telling the story there is no reason they couldn't have used these 5 seasons to tell a smaller story in the 2nd age than compressing the time line to tell all those events in a single lifetime. And yes, I still see that as stupid, because not only is that going to produce a potentially very badly convoluted and disjointed story far different from the books, but limits how deep you can actually go on any of these stories.