You are right OP. But if you look at some replies here it might be clear why some people think is behaviour was only naive, stupid, but not racist.
Covert racism (in his case not so subtle) is a major issue in our society, and almost anyone, and if you complain, will tell you that you are being too sensitive, cannot take a joke etc..
He's an old man who didn't live in a cave until yesterday, he worked in media and was perfectly aware of the horrible implications that picture had. The baby's parents must have felt horrible seeing it, I would have if it was a picture of my children. Disgusting doesn't it describe it.