"I think they did. Cody walks into the room, says "Hmm, there's a letter here", opens it and immediately starts sobbing before he even unfolds it completely. No way he'd have time to read and process it that fast. I think production DID tell him, then asked him to leave the DR, come back in and pretend to read the letter. I'd have preferred to just have the screen go black with a message saying "Cody is informed by the producers that his grandfather passed away," then show the reactions and whatnot."
Man, I feel like there isn't anything on reality tv now that some won't feel are fabricated.
Cody already knew his grandfather was ill. He didn't need to read much to know what the point of the letter was. Honestly, he probably knew once he realized it was a note from home and not something game related.