Steve: I think you are right. The distortion might be conscious for some in the media but for most, I believe, it is something that subconscious. Anytime the exercise of judgment is involved (think "editorial judgment" or newsworthy judgment), an individual's personal bias is going to affect his or her decision. The media's denial of this is what really bothers me.
Applying my analysis to the war in Iraq, since the media mostly oppose the war, and see it through the Vietnam war "quagmire" filter, they tend to filter out or minimize good news and emphasize bad news. Thus, the headline on today's Seattle Times was about the alleged shortcomings of the Iraqi security forces. The indictment of Ken Lay, which runs counter to the "Republicans are in bed with corporate crooks" theme, was therefore minimized: there was a small photo of Lay on the front page, with a small headline indicating he was indicted, but the story itself was relegated to the business section. What should have been the lead story was relegated to a "teaser," and bad news in Iraq was brought to the forefront.