India’s entertainment market is already one of the world’s biggest, with the merger expected to further shake up the multibillion-dollar industry.

India’s Reliance Industries and Walt Disney of the United States have announced the merger of their India TV and streaming media assets, creating an $8.5bn entertainment powerhouse far ahead of rivals in the world’s most populous nation.

Reliance, led by Asia’s richest man Mukesh Ambani, will inject $1.4bn in the merged entity, with the company and its affiliates holding a more than 63 percent stake. Disney will hold about 37 percent, the companies said in a joint statement late on Wednesday.

For Disney, the merger follows a long struggle to arrest a user exodus from its bleeding India streaming business and the financial strain caused by billions of dollars in Indian cricket rights payments, in another example of how foreign businesses can struggle to grow in India.

The merger values the India business of the US entertainment giant at just about a quarter of the $15bn valuation when Disney acquired it as part of its Fox deal in 2019, sources have told the Reuters news agency.

The companies said the transaction values the merged venture at about $8.5bn on a post-money basis. They did not explain how they arrived at such a valuation.

“This is a landmark agreement that heralds a new era in the Indian entertainment industry,” said Ambani, whose wife Nita Ambani will serve as the chairperson and former top Disney executive Uday Shankar will be the vice chair.

Together, the Reliance-Disney merged entity will have 120 TV channels and two streaming platforms, helping Ambani eclipse rivals in the country’s $28bn media and entertainment sector.

“The JV will be one of the leading TV and digital streaming platforms for entertainment and sports content in India, bringing together iconic media assets across entertainment,” the companies said in a joint statement.

The agreement will also help Reliance and Disney stave off competition from traditional rivals such as India’s Zee Entertainment and Japan’s Sony, as well as streaming competition from Amazon and Netflix.

The announcement comes less than a month after Sony and Zee called off a $10bn merger that would have been a formidable force against Reliance and Disney.

The deal also comes as Disney is facing pressure globally to streamline its businesses. Bob Iger returned as Disney’s chief executive in November 2022, less than a year after he retired, and has since restructured the company to make the business more cost-effective.

Still, Disney is up against activist billionaire investor Nelson Peltz who is pushing the home of Mickey Mouse to cut costs, create a profitable streaming business globally, improve the performance of its movie studio, and clean up its succession planning.

Iger in November said the company would like to stay in India, but it was considering its options.

“Reliance has a deep understanding of the Indian market and consumer,” Iger said in the statement on Wednesday, adding the deal will allow “us to better serve consumers with a broad portfolio of digital services and entertainment and sports.”