It is an inside story you only hear from me having sat across my counterparts in Japanese companies who hated, absolutely hated the fact that Dolby jammed their codec into DVD when they wanted MPEG audio which can do multi-channel (although such was never used for real service).I'll take your word for it. The way I remember it was that Dolby Digital had a 5.1 solution when MPEG-2 was still only available for stereo. However, they may have been other issues at play that altered my memories because of the diverging standards PAL/SECAM and NTSC back then.
Here is more to read on multi-channel MPEG: https://www.aes.org/e-lib/online/browse.cfm?elib=6367
The MPEG-2 Audio standard defines multi-channel extensions to the MPEG-1 standard. Up to five full audio band width channels plus sub woofer channel and up to seven additional multi lingual channels are defined in the transmission format. However, due to the backward compatibility to MPEG-1, the overall bit rate which is available for all these channels is limited. On simpler systems a tradeoff between the number of channels and the audio quality is necessary. This paper describes an advanced MPEG-2 multi-channel system based on MPEG Audio Layer III.