The NIT, which is owned by the NCAA, loses money every year. The NCAA does not like to lose money. If the NCAA opts out of the remaining years of the CBS contract and puts the Tourney up for bid it is 99% it will be bid as a 96 team tourney.
It will make the tourney more competitive and make a 16 beating a 1 likely as that 16 will now be the 64th best team. First round matchup will be # 33 vs # 96, etc. Say it was this year. Instead of Kansas playing Lehigh this year in the first round, Kansas gets a first round bye, but their first game is against the winner of the #64 vs #65 game, which is say UC vs Virginia Tech for example. The tourney gets more competitive for the field of 64 because the weak one bid conference teams are eliminated during the #33 vs #96 opening round. When you look at it this way it does not look so watered down but much improved as the final 64 teams will theoretically be the best 64 teams and not the watered down 65 team field you have now.