Last year, Disney (NYSE: DIS) replaced its then-CEO Bob Chapek with his predecessor Bob Iger. Iger has been reviewing several of Chapek’s decisions and in the most recent case, he has reversed some of the policies at the company’s theme parks.

Several visitors to Disney’s theme parks had been complaining about the reservation system and long queues for popular attractions at the parks. In probably his most major shakeup, Chapek has changed several of the park policies.

For instance, the company would now not charge for parking for Disney hotel guests. It would also make photo downloads from the rides at Disneyland free, as was the case when Iger was heading the company.

In an internal email, Disney theme parks chairman, Josh D’Amaro announced the changes. These include allowing holders of annual passes to Walt Disney World Resort reservation-free entry during afternoon hours. The Wall Street Journal reported that the rule would be applicable immediately.

Disney would also significantly increase the availability of its lowest price $104 annual pass.

In the e-mail, D’Amaro said, “Many of you know that I’m in the parks fairly often, and I listen to you and to our guests about the things that are working, as well as the things that might need some change.”

Disney Park Fans Were Irked at Policies Under Chapek

Many Disney fans were irked at the park policies under Chapek, especially the reservation system. The frequent snags with popular rides did not help matters either. Notably, the crowds at Disney parks swelled after the lockdowns were lifted.

The company also increased prices to capitalize on the strong pent-up demand. The dual impact of high prices and increased attendance helped the Parks segment post record revenues of $7.4 billion in the September quarter. The revenues increased 34% YoY even as the company-wide revenues rose only about 9%.

The Parks segment posted an operating profit of $1.5 billion in the quarter. However, the DTC (direct-to-consumer) business lost $1.47 billion in the quarter as the streaming business continued to post losses.

Iger Wants Disney to Prioritize Profits Over Growth

Another of Chapek’s policies that Iger is dismantling relates to the company’s DTC business. Chapek chased growth at the cost of profitability and losses at the business swelled under his watch.

Iger meanwhile wants the company to prioritize profits over growth. At a Town Hall shortly after he took over, Iger said that the company needs to “chase profitability.”

Iger is also looking to change Disney’s organizational structure which became too centralized under Chapek.

In another recent change, he has asked employees to work from the office four days a week. Last year, he had left the work-from-home policy unchanged even as he acknowledged that the in-person model works better for creative business.

DIS stock rallied after Iger was appointed the CEO

MoffettNathanson analyst Michael Nathanson upgraded DIS stock from market perform to outperform after Iger took over as the CEO.

Among other brokerages, Wells Fargo and Needham also believe Iger’s return would help the company. We have a guide on how to buy Disney stock.

Disney started offering its ad-supported streaming tier in December at $7.99 per month in the US. It simultaneously increased the price of the ad-free tier by $3 to $10.99 as the company strives to make its DTC business profitable.

The decision was taken by Chapek only as he asserted that the company’s streaming losses have peaked and the business would become profitable by the fiscal year 2024.

Netflix too started offering an ad-supported tier a month ahead of Disney but reports suggest that the company refunded money to advertisers after it could not meet viewership targets.

Evercore ISI meanwhile is bullish on Netflix stock and has added it to its top ideas for 2023. There is a guide on how beginners can buy Netflix stock.

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