As a general approach, I would read the first JSON file and construct a Hash of Array where externalId is the hash key and the value is a reference to array of the watchers values.

Then read the 2nd file one record at a time and look up the watcher data to add to each one from the hash table.

A hash table with 250,000 keys is a "doable thing". The size of the 2nd file doesn't matter since you can read a record, add watchers, then output the record.

Hope this helps.