OK. I just had to research this since it seemed too weird to be anything other than a marketing ploy.

To my surprise, my cynical assumption turned out to be completely wrong as far as I can tell.

Seems the "diagonal picture measurement" goes way back to when TVs first started being made in the 1930s. Due to technical limitations in the manufacturing process, only
round picture tubes could initially be built.
The picture was projected in the center of the tube. And the once massive furniture-like case (often with doors) most sets were built into put a rectangular bezel around the tube to mask the area that didn't show the picture. The diameter of the tube determined maximum size of the image. The "diagonal" is the length of the diameter line as it passes through the image area.
Like so:

This was probably the most accurate way to let a customer know what the image size was since the diameter of the picture tube only set the
maximum size of the image. It did not reflect the
actual size being projected. A 25-inch set could easily have a picture diagonal that measured
exactly the same as the one on a 23-inch set. And many did because
the smaller the diagonal in relation to the diameter of the tube, the better the quality of the picture projected. This was because image convergence became a problem the further out you got from the center of the tube.
Rectangular tubes were first attempted as early as 1950.
From Popular Mechanics (March 1950) - click to enlarge.

But non-round picture tubes didn't go into real production till around 1965 when Motorola introduced the first generally available rectangular tube according to a Popular Science (Dec 1964) article. Read it
here.
Other manufacturers soon introduced their own models. In 1966, the FCC issued a ruling that TV images should be measured on the diagonal just like they were when the tubes were still round to avoid possible confusion for the consumer.
So it's definitely
not a conspiracy.

And it
does make sense in a way.

But that still doesn't explain why they couldn't just put the WxH measurements on the box too.
