Why does Google News exist? If it's to keep people using a Google property, that has value. If it's to build profiles of user interests, that has value. If it's for goodwill, that also has value.

Google believes it receives some sort of value out of their News service even if that value isn't directly in the form of advertising payments.

Google News exists so that people read more news online and Google makes more money brokering ads for online publishers. Goodwill and more data are nice benefits but have a smaller impact on Google's bottom line.