That was just a shitty excuse. At worst they could have just joined GW's animators program (on the assumption their png manipulation can be even argued to be animation) and would have retained complete freedom. It's not like they ever did spicy content like Arch and were in any danger of being sued or limited.
And of course when Arch got in trouble with GW they didn't do shit because he was a wrongthinker. He also tried to back down from GW back then, but his attempts of VtM and Tranch seemed to fail (not to mention they were WAY more leftist than GW).
Also by the end TTS became extremely gay, with songs and shipping.