McClatchy ( MNI), the publishing chain once viewed as a savior of newspapers, is now in a sorry state. The publisher reported a 58% drop in third-quarter earnings Tuesday and signaled that it would record an impairment charge to reflect the steep deterioration in its financial results and stock price. Following the news, CEO Gary Pruitt apologized to investors for the company's dismal stock performance amid an extended malaise for the print media industry. "We are disappointed in the share price -- no doubt about it," said Pruitt on a conference call with analysts after the earnings release. "I know the shareholders are very disappointed, and I'm sorry we haven't done better." Pruitt has been humbled by the devastation in newspapers recently after he made a bold and optimistic bet on the industry by outbidding private-equity firms for Knight-Ridder when it went on sale last year. The acquisition made McClatchy the nation's second-largest newspaper chain behind Gannett ( GCI), the publisher of USA Today. Shortly after the deal was announced, Pruitt published an op-ed in The Wall Street Journal headlined "Brave News World," extolling the acquisition and challenging conventional wisdom that newspapers are in permanent decline. "The fact is, newspapers are still among the best media businesses -- and the most important," Pruitt declared. Since then, shares of McClatchy have lost over three-fifths of their value. Though it acquired Knight-Ridder in a deal valued at $6.4 billion, McClatchy is now valued by the stock market at $1.5 billion.