Media coverage of major events tends to be very biased. Terrorist attacks are no exception. It is definitely true that media coverage helps promote the agendas of terrorist groups. They don't really care if the coverage paints them in a negative light, just getting the coverage at all is their goal.
We must keep in mind that terrorists are terrorists because they cannot accomplish their political goals through conventional and legal means. The only way they get media coverage is by taking extreme action that is certain to make it on the news.
With that said, if the major networks just decided to stop reporting on terrorist activity, we'd have an interesting situation. It's not like the networks don't decide for themselves what to cover anyway. Plenty of people die in the world for unjust reasons without any media coverage at all.
However, it would be unacceptable for a government to actually ban media coverage of terrorist activities. All that would do would encourage people to get the news out through other means (which isn't too hard to do anymore) and make us look like the bad guys and the terrorists look persecuted.