I also seem to remember that Charley wanted KTMs originally and Ewan, who gave way on the matter wanted the GS. When KTM withdrew their offer, they 'seemed' so incensed that to then work with KTM on the second round would have been seen as hypocritical in the extreme.
Although you say to ignore contractual issues, anyone who has been at any of the bike shows will have seen Charley on the BMW stand, signing books, chatting, being photographed. So for them and in particular for Charley, who doesn't have a Hollywood career to fall back on, it's the entire commerciality of the whole thing that is important, not just the choice of bike. Add in the C&E effect, that has seen the GS become one of the best selling bikes in the country and you can see why BMW would be loathe to lose the endorsement and why, financially, they would make it worthwhile. KTM is, comparatively, a tiny manufacturer and could not compete. Remember, a lot of the people buying GSs now are the same customers BMW are aiming their cars at.
Finally, LWD was on GS 1200s, whereas the LWR was on 1150s. I've not ridden either, but I understand the gap between the 1200 and KTM is not as great as with the 1150?
Notice how little coverage Charley has been getting on his current 'adventure' though....