This is the 13792nd most frequent Russian word.
новостью
"Новостью" means "news" in English.
In this sentence, 'новостью' is used in the instrumental case, indicating the means or instrument by which the action is performed—here, her news is the means of surprising.
Она удивила меня своей новостью.
She surprised me with her news.
Here, 'новостью' is also in the instrumental case, used in a figurative expression to convey trust or belief in something, in this case, the news.
Я не мог поверить этой новостью.
I couldn't believe this news.
Here, 'новостью' is in the instrumental case, showing the thing being shared or communicated—in this context, an interesting news.