I was living in N. Alabama when Katrina hit. The news from local sources gave a very different picture of events than what was streaming out from the national outlets. I agree with Bayonet's point, and think that a grand conspiracy of all media strains credulity. On the other hand, I disagree to the extent that a smaller number of editors and publishers at the national level can't establish narratives that further a common agenda.
As an example, the coverage of successes in Iraq and Afghanistan is exclusively local and blog. (OK, a little bit on Fox.) Maybe I missed them, but I don't recall even hearing of stories on ABC, CBS, NBC, CNN, the NYT, WaPo, etc. about the reduction in violence and return to normalcy in Iraq following the change in strategy and increased troop strength. Instead, Iraq just dropped out of the national news.
We can take today as a test. Will the national media cover today's bombing as out of character for the changes that have taken place, or will they use it to further their agenda?
NYT: "Bomber Kills Dozens in Iraq as Fears of New Violence Rise" (And I'll claim my point as proved.)
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