What can you do? Not tell him? That would be bad.
So what can you do? You make the news as easy to take as possible:
1. Tell them early: bad news isn't like fine wine...it doesn't get better with age.
2. Give them all the facts: going in with only some of the details almost makes it worse...keeping #1 in mind, gather as much info as you can and then let the boss know.
3. Give them a plan or options to fix the problem: just dumping a problem in the boss's lap isn't that helpful and won't be very appreciated.
Bad news is going to have to be shared eventually, but it doesn't have to be overly painful. Take a proactive approach, keep as positive a demeanor as possible, and be honest.