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There was a study conducted by Eric Ulken named Non-traditional sources cloud Google News results. In the study, Eric claims "that the search engine's selection of online-only news sources to include in Google News skews its search results toward political extremes."
When articles from non-traditional sources are omitted from the comparison, there is no significant difference in the spread of the article balance scores between Google News and Yahoo News. This indicates that virtually all of the difference in bias between articles returned by Google News and those returned by Yahoo News is attributable to Google’s use of non-traditional news sources.
He showed how Yahoo! News, which uses more "traditional" news sources then Google News is less bias.
I decided to start a thread on this topic, after finding a blog entry by Brad Hill on this topic. I named the thread at Search Engine Watch Forums Google News Unbiased When Blogs Left Out? The thread goes into a discussion of what makes a blog's opinion less "skewed" then a traditional news outfit? But, as Danny Sullivan carefully clarifies,
As for bias, the study specifically looked at whether stories were favorable or not to Bush and Kerry. With Google, it found mainly not that it was leaning any particular direction but that along with showing lots of "balanced" stories, it also showed extremes on the spectrum. Which if you think about it, is kind of balanced.
Update: Looks like Greg Jarboe posted an entry on this topic this morning at his new blog named SEO PR News Blog.
