I said it was E.
My notes:
schools are a repository for moral and cultural values; no material should offend its values
opposition on an issue is certain to run afoul

A: This is out of context. No where in the paragraph suggested that publishers will exit the industry.
B: There is no indication that the content will become neutral/bland. In fact, it may become the opposite (very polarized)
C: Does not mention any thing about pressure groups
D: The mention of intervention is out of context.

(A) fewer and fewer publishers will be willing to enter the financially uncertain textbook industry
There is nothing said about financial issues within the passage.

(B) the ethical and moral content of textbooks will become increasingly neutral and bland
Based on the passage the textbook publishers rely on community goodwill. The community here are the groups within society. Thus the textbooks should contain only material which does not offend any of the groups within society. This can be achieved if it is as neutral and bland as possible.
Lets keep B

(C) more and more pressure groups will arise that seek to influence the content of textbooks
The number of groups is irrelevant.

(D) the government will be forced to intervene in the increasingly rancorous debate over the content of textbooks
The passage focuses on the content of the textbook and not on the debate itself.

(E) school boards, teachers, and principals will find it nearly impossible to choose among the variety of textbooks being offered
As the puplishers rely on the community and not on the individual groups no rise in variety of textbooks is expected.

IMO: B

Which of the following best completes the passage below?

In today’s pluralistic society, textbook publishers find themselves in an increasingly uncomfortable position. Since the schools are regarded as a repository of society’s moral and cultural values, each group within society wishes to prevent any material that offends its own values from appearing in textbooks. As a result, stance on an issue is certain to run afoul of one group or another. And since textbook publishers must rely on community goodwill to sell their books, it is inevitable that______

(A) fewer and fewer publishers will be willing to enter the financially uncertain textbook industry
Wrong. The argument and the premise is not concern with future publishers entering the market. Plus the argument does not talk about financial uncertainty.

(B) the ethical and moral content of textbooks will become increasingly neutral and bland
Correct. Because one stance will offend other group and because publishers rely on community goodwill, it will have to take a neutral stand to protect its image.

(C) more and more pressure groups will arise that seek to influence the content of textbooks
The premise or the argument does not talk anything about pressure groups. And if the publishers rely on community goodwill, why will they scum under the pressure of pressure groups.

(D) the government will be forced to intervene in the increasingly rancorous debate over the content of textbooks
Wrong. We are talking about being moral right and socially presentable. This has nothing to do with the government.

(E) school boards, teachers, and principals will find it nearly impossible to choose among the variety of textbooks being offered
Wrong. This argument is not talking anything about the increased competition between publishers.