Hayley Valentine, director of the BBC Scotland Scotland, said the Scottish soap opera River City was ruled because it no longer has the value for money.
She provided evidence in the Scottish Parliament to Scotland's drama investment strategy and its priorities.
The broadcaster announced in March that River City would be scrapped after 24 years, leading to criticism from actors and crew in the industry.
Ms Valentine said that as audience characters declined, the “cost per audience” of watching the show is now much higher.
Ms Valentine told Holyrood's Cultural Council that she had no decision to end the show easily.
She said: “I did consider the actors, crew consequences of the people affected by the decision.
“However, we have to put the needs of our audience first, and the audience in River City has dropped dramatically over the past five years.”
BBC Scotland announced three new dramas – consultants, Ke and the young team, which will create new opportunities in the independent field of television production.
It said that the total investment in Scottish BBC drama is expected to exceed £95 million in the next three years.
Ms Valentine said the new drama costs much more, but the BBC expects them to provide a larger audience.
"In terms of audience value, I'm afraid River City will no longer test us. We really hope the new drama will."
River City started in September 2002 and will continue filming until March, with the final series airing in the fall of 2026.
Ms Valentine said the BBC had explored options for the show, such as changing formats, display time and iPlayer access, but "it hasn't worked yet."
She added: "We gave it a very good run, but I do think it's time to do something else."
Ms Valentine told the committee that online dramas such as Shetland provide about 700,000 audiences in Scotland and seven to eight million in the UK.
Meanwhile, River City provides an average of 200,000 viewers per episode.
Luke McCullough, director of corporate affairs at the BBC, added: "The other BBC Scottish dramas we produce will be more than twice the minimum."
Set in the fictional Shieldinch, the series was specially made in Dumbarton.
Labour MSP Neil Bibby has filed a motion to save the show, claiming that staff were told the show was about to end due to an expiration of the lease at the shooting location.
Mr McCullough denied this and told the committee that the decision was based on editorial reasons.
However, he said RAAC found it on site, adding: "At present, there is no viable option for the BBC to renew the lease based on the on-site conditions."
McCullough said the decision to end the show next year is related to the end of the lease.
But if the broadcaster wants to keep on the show, “we’ll find a way to make it”, he said.
Last month, several actors of the program held signs of protesting cancellations outside the Scottish Parliament.
Stephen Purdon, who played Bob in the show, had previously told BBC Scotland News that the program is a pipeline for industry talent.
He said the program’s training academy teaches participants through classrooms and workshops.
River City was originally a Scottish rival and a Scottish rival in Coronation Street, but has never been exhibited on the UK-wide network.
It features an early role of Outlander star Sam Heughan.
Deacon Blue singer Lorraine McIntosh, Scottish acting veteran Johnny Beattie and Eastenders actor Alex Ferns also played the show.
BBC Scotland said it will increase its total investment in dramatic over the next three years, with a focus on "world-class production" that can be sold internationally.