Reader was dropped in the run up to G+. I believe there was a strategic decision to try and get people to move to G+ and move both personal news and organisational news together.

The leadership was never completely honest about why Reader was shutdown, and the stated reasons didn't pass some basic sniff checks. But it was easy to read between the lines: the executives' attention was on other things, and Reader was a threat to their growth. But also it was a passion project that a company like Google would struggle to keep updating since it brought in little revenue (even though there were hordes of people volunteering to maintain it for free in their 20% time).