Two words which often go together, money and power.
Of course there has always been the "sensationalization" of news to some extent, where a big headline helps to sell newspapers. "Triple Murder Downtown" sells papers, they say.
Now the news industry has noticed that even things like a winter storm can get more readers/viewers if they play it up, perhaps give it a serious sounding name, such as the "Nor'easter of 2008". You'll tend to pay more attention to a storm (or whatever they have to sell that day) if they give it a serious enough sounding name.
I believe that sensationalization has always gone on to some extent. What's changed dramatically however, are regulatory constraints placed on media companies, and these changes appear to have had a profound effect.
During the Reagan presidency, and again under Clinton, the laws were loosened regarding the ownership and regulation of TV and radio, as well as newspapers. Suddenly, mergers and acquisitions in the media fields abounded, finally settling out to where a handful of huge mega-corps now own virtually all of the media we see, hear and read.
Companies like General Electric now own massive media empires (NBC et al), and some even say these mega-corps use them to push their business agendas, with billions at stake (such as the news division advocating and broadcasting positive reviews regarding a new "Smart grid", or for green energy such as wind turbines).
Some say they not only use their media empires to push particular products, but to shift the national opinion on public policy issues. Some have said these giant corporations have used their news and media arms to sway even our congressional and presidential elections.
Today, it's not just about the money you can make from a single headline. Today it seems, it's about power as well.
And if you're concerned that the world is a serious place, even a dangerous place, if you're always a little worried, you'll tend to trust the authority that is. You'll believe what they tell you.
And you'll do what they ask.
Why does the media like to induce fear and doubt?
It's about money, and it's about power.