Custom Taxonomy Not Showing in Menu

As seen in the Codex: http://codex.wordpress.org/Function_Reference/register_taxonomy

<?php
add_action( 'init', 'create_book_tax' );

function create_book_tax() {
    register_taxonomy(
        'genre',
        'book',
        array(
            'label' => __( 'Genre' ),
            'rewrite' => array( 'slug' => 'genre' ),
            'hierarchical' => true,
        )
    );
}
?>

From what I see in your code, you are not linking the taxonomy to your post-type. Try changing

custom_post_type

to

news