From watching repeats on UK Gold many years ago and buying the DVD's it seems obvious to me that is when the decline began as well but oddly I don't think this was reflected in ratings was it? I think Leela and K-9 in particular were popular companions.
There was actually a significant drop in ratings between Hinchcliffe and Williams. Williams' first season had significantly lower ratings than the Hinchcliffe seasons. Of course, ratings never tell the full story, there could have been more competition on the other side. Williams' last season had some of the best ratings in Doctor Who history (but then there was nothing on ITV for many weeks due to a strike!)
I think that under Williams, it became The Tom Baker Show rather than Doctor Who. It became sillier and sillier and sillier, and eventually people were only tuning in because they liked Tom Baker and Lalla, or liked Douglas Adams' jokes. You could tell that, too often, directors and actors were not taking the show as seriously as they once did.