This paper examines key aspects of the contradictions and tensions in the Iranian media market, social stratification and competing forms of Islamism/nationalism by looking at the context of production and consumption of the media in Iran. By examining the role of the state in this process and the economic realities of the media in Iran, it challenges the one-dimensional liberal focus on the repressive role of the state and suggests that the Iranian case demonstrates a peculiar feature of the Iranian communication industry where liberalization and privatization are the order of the day, but where the state is still reluctant to give up its ideological control over the media. And this is another contradiction of an overtly ideological state keen on'modernization' caught between the web of pragmatism and the imperative of the market, and the straightjacket of 'Islamism'.