Television screens are measured diagonally because this is the way screens were originally measured. Early TVs had circular picture tubes that projected images onto the screen. The surface area of the screen could not be larger than the surface area of the tube, so measuring the tube gave the best measurement of the screen.
The use of diagonal measurements to determine screen size was not considered to be misleading, since previous televisions all had a ratio of 4:3. The ratio meant that the height of a screen was three-fourths the size of the width. When widescreen televisions become popular, the ratio jumped to 16.9, and the stated screen size became far less accurate than the actual horizontal measurement. Due to lawsuits that arose from the discrepancy between the stated screen size and the actual size, manufacturers are legally obligated to specify the viewable screen dimensions. However, most screens are still identified and marketed using the diagonal measurement. Some manufacturers have started to add a "w" to the screen size to indicate a television is widescreen.
The diagonal measurement method is slightly different for CRT TVs, or cathode ray tube televisions, and LCD TVs. A CRT TV is measured diagonally from the top corner to the bottom corner, including the TV casing. However, LCDs are measured the same way, but only the actual screen is measured.