Walt Disney Co. and billionaire Mukesh Ambani’s conglomerate have signed a binding pact to merge their media operations in India, creating a sector behemoth valued at $8.5 billion in one of the world’s fastest-growing entertainment markets.

The US media company will control 36.84%, while Ambani-led Reliance Industries Ltd. will own 16.34% in the joint venture, according to a Reliance statement on Wednesday. Viacom18 Media Pvt. Ltd. will control the remaining 46.82%.

Reliance will also invest another 115 billion rupees ($1.4 billion) in the joint venture as growth capital and Disney may contribute certain additional assets after getting regulatory approvals. The joint venture will be granted exclusive rights to distribute Disney films and productions in India, with a license to more than 30,000 Disney content assets.

The deal is expected to close in the last quarter of 2024 or first quarter of 2025.

The binding agreement, which Bloomberg reported on Jan. 25 citing people familiar with the matter, shows Disney’s decision to recast its strategy to woo viewers in the South Asian nation of over 1.4 billion people. Intense competition has made it increasingly difficult for global giants to crack this market. The merger, once closed, will create one of India’s largest entertainment firms with more muscle to take on global competitors, including Netflix Inc. and Amazon Prime Video.  

The deal will also help Reliance — a relative newcomer to the Indian media sector — bolster its streaming platform, Jio Cinema, by accessing Disney-Star India’s content library as well as draw on its sport broadcasting experience.

Nita Ambani will serve as the chairperson of the joint venture and Uday Shankar is slated to be the vice chairperson, according to the Reliance statement. 

Goldman Sachs was the financial and valuation adviser for Reliance and Viacom18. Raine Group and Citi Group acted as financial advisers to Disney.

Disney has been grappling with multiple challenges in India such as retaining subscribers and securing coveted media assets. Reliance, meanwhile, has become more aggressive in recent years and cornered a larger slice of the local media and entertainment businesses. 

Ambani’s conglomerate has emerged as one of Disney’s arch rivals in the Indian market. Reliance outbid Disney in 2022 to win the streaming rights of Indian Premier League, the massively popular cricket tournament that has emerged as a $6.2 billion juggernaut.

It bagged a multi-year pact in April to broadcast Warner Bros Discovery Inc.’s HBO shows — Succession, House of the Dragon and The Last of Us among others — which were earlier with Disney.

The merger “can result in meaningful cost savings and improve Disney’s bottom line,” Geetha Ranganathan, a Bloomberg Intelligence analyst wrote in a Dec. 12 note. 

(Updates throughout)