• 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.

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.

Cricket fever

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 by forming a joint venture with Reliance, which is one of the most influential names in the Indian market, Disney could share the burden of content and operational expenses while mitigating competitive pressure.

"This move signals that Disney still sees opportunity in this market, a change from earlier indicators that the company may look to exit India altogether through a sale," he said.

Minimal earnings impact

Disney in a separate filing said it expects to record non-cash pretax impairment charges between $1.8 billion and $2.4 billion in the current quarter, about half of which will be due a write-down of the net assets of Star India.

"But I think the bigger picture here is what's happening with streaming," Jason Ware, chief investment officer of Albion Financial Group, told CNBC's "Street Signs Asia."

"I think I said six months ago that they're [Disney] going to see profitability in streaming by the end of 2024. It looks like that is very much on track, and might actually have in the third quarter, we'll see."

Disney has been struggling with subscriber losses in India over the course of last year and had announced a recent overhaul along with a $5.5 billion cost-cutting program that will result in a 7,000 reduction in employees globally.

Now with the merger, Disney is aiming to regain subscribers in the coveted Indian market and keep its bottom line intact.

Ken Leon, research director at CFRA Research, told CNBC the JV will not hurt Disney's earnings, noting that the merger was a "win-win for all parties."

"Cricket is everything in India ... I think [CEO] Bob Iger made the right decisions here," Leon added.

Disclosure: Entities tied to Reliance Industries Chairman Mukesh Ambani have a stake in the parent company of CNBC TV-18, CNBC's local India partner.