As noted, a combination of factors:
1. The NFL continued to erode the fanbases of SMU, TCU, and Rice, and those schools became less viable compared to big state schools
2. The rampant cheating of the early 80s really broke down relationships among the universities as well as hurt the competitiveness of the on-field product
3. In the late 80s / early 90s Texas regularly flirted with the Pac(8?) 10, and aggy with the secsecsec - as noted, Texas did not want to join the secsecsec for academic reasons
The Big 8 became a good compromise because it met everyone's goals: kept Texas and aggy together in a conference that was a good option for both schools. The XII might have continued to be a great conference if corn were not such little bitches. In the early days, there was not a better conference out there as virtually every school had some great years teams particularly corn, OU, and KSU.