Good morning. 🚨 Gov. Gavin Newsom has ordered California's nearly 40 million residents to stay home except for essential trips, all but shutting down the nation's largest state to combat coronavirus.

• Breaking overnight: The pandemic has now claimed the lives of more than 10,000 people globally, per Johns Hopkins University.

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Bad Times in Burbank

Bob Chapek inherits a crisis

Moving the Market: When Bob Chapek was named chief executive of Disney last month, he was thought to be inheriting one of the best jobs in media and entertainment. Instead, thanks to the coronavirus outbreak, he has inherited a crisis.

• The big picture: Disney's entire business is vulnerable to the coronavirus pandemic: Film production and distribution, theatrical shows, theme parks, cruises, television, live sports — the list goes on. Disney as a business has effectively been put on hold.

• "Every part of Disney is exposed to COVID," Matthew Ball, the media analyst and former Amazon Studios strategy chief, told me.

• This hurts "every pillar of the business," said one veteran Hollywood executive. "No part of the business is untouched."

The latest: Disney acknowledged the extent of this damage in an 8K filing this week. It also filed with the SEC to raise new money by selling debt securities. This all came after Fitch Ratings put the company on credit watch, with a negative outlook.

• "We have closed our theme parks; suspended our cruises and theatrical shows; delayed theatrical distribution of films both domestically and internationally; and experienced supply chain disruption and ad sales impacts," Disney said in the 8K filing.

• "In addition there has been a disruption in creation and availability of content we rely on for our various distribution paths, including most significantly the cancellation of certain sports events and the shutting down of production of most film and television content."

The bigger picture: The coronavirus pandemic has hurt every media business, including NBCUniversal (the parent company of NBC News), which has also been forced to close theme parks, suspend content production and make due without live sports. Even streaming services like Netflix have had to freeze content production.

• But Disney is in a unique position. Unlike NBCUniversal or WarnerMedia, it doesn't have the shelter of a telecommunications conglomerate like Comcast or AT&T. Those companies have been affected by the pandemic, but their businesses remain largely intact.

• Media analyst Rich Greenfield referred to it as the perfect storm: "All six parks closed; no sports, which is the life-blood of ESPN/ABC; movie theaters closed preventing Disney from releasing blockbuster films from Disney/Pixar, Marvel and LucasFilms."

• Plus, "with Film/TV production shut down they cannot ramp up content for newly launched Disney+, which was already short on fresh programming," he said. "Not to mention, they have a new CEO who is less than a month into the job after Iger's abrupt exit."

What's next: The good news for Chapek is that Disney's reversal of fortunes comes after 15 years in which his predecessor, Bob Iger, grew the company's profits by more than 300 percent and grew its share value by more than 400 percent. So Disney can endure — for a time.

• "Disney is very exposed," one veteran Hollywood executive said, "but it also has the strongest global entertainment brands — and a lot of cash — and it has the best chance of rebounding when it’s safe to go outside again."

• Ball said Disney would probably bounce back faster than its competitors, citing a diehard fanbase that would continue to attend theatrical releases, show up to theme parks, watch sports broadcasts and buy merchandise when the pandemic ends.

The big question: How long til the pandemic ends? Because Disney will be forced to endure this pain so long as families avoid parks and theaters due to the fear of contagion. And according to the World Health Organization, a vaccine may be 18 months away.

• Disney spokespeople did not respond to a request for an interview.

🍒 Sports Scramble 🍒

In yesterday's newsletter, I wrote that the sports-media business could collapse if coronavirus forces networks like ESPN to endure a protracted period of time without live sports.

• This Sunday, ESPN 2's program schedule will feature professional stone skipping, hamburger eating, cherry-pit spitting and arm wrestling competitions. This isn't a joke.

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Cost of Coronavirus

Reed Hastings hit in Europe

State of the Stream: "Netflix said on Thursday it would reduce its bit rates across all its streams in Europe, in effect cutting traffic on its European networks by 25% to preserve the smooth functioning of the internet during the coronavirus crisis," Reuters reports.

• "The move came after... European Union industry chief Thierry Breton... urged the video streaming service to downgrade the quality of its video to avoid internet gridlock."

• The reduction is a blow to Netflix. Nearly one-third of its paying subscribers come from the Europe, Middle East and Africa region. (Netflix doesn't break out Europe specifically).

The big picture: Internet gridlock brought on by coronavirus is a major concern for governments and businesses around the globe. As NYT's Davey Alba and Cecilia Kang wrote recently, "internet networks are set to be strained to the hilt."

• What's next: "For now, Netflix’s decision to throttle back video applies only in Europe, not in the U.S. or other territories," Variety's Todd Spangler writes. Hopefully for Hastings it stays that way.

Market Links

• Mark Zuckerberg talks to Dr. Anthony Fauci (TC)

• Sheryl Sandberg faces a near-term ad hit (Information)

• Dara Khosrowshahi sees Uber rides fall by 60-70% (TC)

• Tim Cook faces lingering supply chain issues (Bloomberg)

• Elon Musk gets in trouble on Twitter, again (Recode)

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Indoor Activities

Video games see a virus boost

Future of media: With the coronavirus pandemic forcing more and more people to self-isolate, consumers are increasingly turning to video games. Verizon says overall video-game internet traffic is up 75% during the outbreak. Twitch has seen gaming viewership double.

• The big picture: "These new records have helped highlight the growing but under-appreciated cultural role of video-gaming entertainment," media analyst Matthew Ball writes in The Economist.

• "Excluding hardware, consumers now spend $120bn per year on video gaming globally, according to Nielsen: this compares to roughly $30bn on recorded music and $42.5bn at the box office."

• "The market capitalizations of major game publishers such as Activision Blizzard and Electronic Arts are several times higher than former Hollywood stalwarts ViacomCBS, MGM or Lionsgate."

The bigger picture: "Many analysts and industry leaders see [video games] as social networks more than a digital version of a board game or an interactive movie. Players use these games as a way to connect with and spend time with their friends, just as teens once loitered at a shopping centre or spent hours on the phone."

• What's next: "Most analysts expect this growth to continue in step with gaming’s increasingly sophisticated capabilities."

🏀 What's next: Remember sports? The Ringer's Kevin O'Connor considers Adam Silver's options as he tries to chart a future for the NBA.

See you Monday.