Why was it cancelled?

Most say it was ratings while some know it was because of the infamous Farakhaan appearence on the show that got Arsenio in hot water with CBS execs. Not long after the show was cancelled.

"A commitment to cinema means to lead a technically deviant lifestyle."

I would say it was a combination of declining ratings and the Farakhaan appearance.

Straight from Arsenio:

"The rumors are a lot more interesting than the reality. I simply woke up one day and realized I was no longer in love with what I was doing. And the landscape for success in syndication was going to change drastically when CBS inked their deal with David Letterman. So I wrote my letter of resignation to Kerry McCluggage at Paramount Television."

You can take it or leave it. Some people believe the "controversy sparked bad ratings" story a lot more since it has been circulating since his cancellation.

MM

This is what is currently found on the WikiPedia page (http://en.wikipedia.org/wiki/The_Arsenio_Hall_Show) for this show if you want to check it out for yourself that explains some of the biggest factors leading to the shows downfall and eventual demise.

The program remained popular into 1993 but as the year went on Hall and Paramount began having problems. Two of the largest ones resulted in a drop in ratings and eventually in the show's cancellation.[17]

In August 1993, David Letterman left his position at NBC to join CBS. At the time many of the network's affiliates were airing The Arsenio Hall Show following their late local news (including on Hall's then-hometown CBS affiliate WJW-TV in Cleveland), as CBS did not offer much in the way of programming during late night at the time outside of reruns of crime dramas and its long-running public affairs and news program, Nightwatch. CBS' previous attempt at a late night series, the short-lived The Pat Sajak Show, had failed to gain a foothold in the ratings and Arsenio, which had premiered seven days before Sajak, had been an almost immediate success. In fact, Hall's show began preempting Sajak's in some of these markets due to its popularity; the struggles eventually resulted in CBS canceling The Pat Sajak Show after just one year on air. In Chicago, CBS' owned-and-operated station, WBBM-TV, aired Hall's show after Sajak's, and would carry "Arsenio" there for the balance of its run, alternating time slots between 11:30pm and midnight local time. This time, however, the situation was different - instead of getting a one week head start on a show with an unproven emcee (Sajak was, and still is, best known for being the host of the game show Wheel of Fortune), Hall was now facing a new challenge in the second-most popular late night host of his time.

To make matters even more problematic, Letterman's Late Show was an instant hit and most, if not all, of Hall's CBS affiliates picked up what would become the most popular late night program for the season. Furthermore, Jay Leno was slowly beginning to gain an audience as host of The Tonight Show on NBC and although the ratings slide suffered when Letterman took over at CBS eventually tapered off, the damage had been done. Arsenio, which had performed respectably in the ratings against The Tonight Show and various other late night programming it had faced, was now a distant third behind Letterman and Leno. It also did not help matters that Arsenio was not getting the popular clearances it once had, and the program found itself in more and more undesirable time slots as the fall season began.

Then in February 1994, Hall and Paramount butted heads when Nation of Islam leader Louis Farrakhan was booked to be on the show. The controversial religious figure was given the entire hour so Hall could interview him, despite a press release saying that Hall would have other guests[18] appearing on the program. The controversy caused by Farrakhan's appearance was the last thing the already struggling program needed, as the ratings slid again after this. Paramount decided shortly thereafter that they would cancel Arsenio after five years, and the final episode aired on May 29, 1994.