The last four episodes (after the strike) pulled in great numbers. The show started at around 8,5 million viewers and ended at around 7,5 million, usually bouncing back to 8 million. It definitely had potential for a second season. Way more expensive shows with lower ratings aired on better nights get a renewal nowadays.
The problem was basically that:
A)CBS wanted Warner Brothers to step up and pay more.
B) Creative differences between CBS and the shows creators and writers. Season 2 would have moved away from the crime-solving Mick to more 'supernatural' drama. They wanted to introduce the Legion, a secret human-run organization controlling the vampire population. Whenever there are too many vampires, they start killing off some (The French Revolution was such an example). The relationship between the Legion and the vampires was explained like the relationship between the police and the mafia. Both know of each other ad respect/ fear each other, but whenever the mafia gets too strong or meddles too much the police has to take them down a notch. They released this list with all of the vampires in L.A. and in season 2 Mick would have had to decide between his brothers/ sisters and the humans. Also Coraline and Lance would have made a comeback. Basically more drama, more action, more vampire stuff and less day-to-day crime solving.
CBS, however, wanted CSI: Vampires. They wanted way less personal drama, less vampires and less Beth in favour of more cases for Mick (like CSI) that he solves weekly.
The two creators of the show didn't comply and were fired. The writer and producer Werksman sought a compromise but insisted on keeping the focus on the love story between Mick and Beth. He was fired shortly after.
3) Even though Moonlight wasn't bad in the ratings department it had less viewers than its lead-in and its lead-out. Also everything else on CBS was fairly successful at that time and they were confident about their new pilots so they decided to give their 'average' show Moonlight the boot (not forseeing the vampire-boom and thinking it wouldn't attract more viewers). Also, even though fans campaigned for the show, they didn't really listen because their renewal of Jericho (based on fan campaigns) didn't work. Jericho even had less viewers upon its return so they decided to not give Moonlight a chance
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