Disney's $8.5 billion Reliance merger is a streaming wars win in sports-obsessed India

Walt Disney and Indian conglomerate Reliance's media merger will give back highly valuable cricket streaming rights to the U.S. firm in a country absolutely obsessed about the sport.

Disney announced Wednesday that the companies will be merging their respective Star India and Viacom18 units into a newly created Star India joint venture, valued at roughly $8.5 billion on a post-money basis, excluding synergies.

The merger is expected to have more than 750 million viewers in the rapidly growing Indian market. Asia's richest man, Mukesh Ambani, will control the venture and inject $1.4 billion into its growth strategy, while his wife, Nita Ambani, will become the chairperson.

Disney acquired Indian streaming service Hotstar and Star TV channels in 2019 and had exclusive streaming rights to cricket's lucrative Indian Premier League (IPL), which it had turned into a paid service by 2020. The IPL is one of the world's top cricket leagues, attracting first-class players from every corner of the globe.

But Ambani won the IPL rights off Disney in 2022 for $2.6 billion and made the service free on its own streaming platform, Jio Cinema, which resulted in Indian customers fleeing Disney's platform.

Disney lost 4.6 million customers for its streaming service, Disney+ Hotstar, in India during the first three months of last year.

But things could soon be turning around for Disney's streaming efforts in India after the merger, which is key for the company to regain lost customers in the world's most populous country.

"Disney has been trying to regain its footing in India ever since it lost the streaming rights to Indian Premier League cricket matches in 2022," said Jamie Lumley, senior analyst at Third Bridge, told CNBC via email.

Lumley says