The Government has poured cold water over a rumoured merger between broadcasters TVNZ and MediaWorks, with Prime Minister John Key saying such a union was "very unlikely to happen".

The Australian reported MediaWorks was in merger talks with state-owned TVNZ and the TV3 owners' acting chief executive David Chalmers was also seeking meetings with Australian companies.

MediaWorks was taken over by vulture fund Oaktree Capital last year after the company had been tipped into receivership by banks seeking to cut loose hundreds of millions of dollars in losses.

In Wellington today, John Key said he had been informally made aware of talks between MediaWorks and TVNZ, but these were limited discussions. "There's some interest on the TVNZ side in some of the assets owned by MediaWorks," he said.


Key raised the spectre of competition regulators also scuppering such a deal, given that the two companies together dominated free-to-air television.

"We like the concept that there are competing networks," Key said.

A spokesman for finance minister Bill English, who also responsible for State Owned Enterprises such as TVNZ, said the Government had no plans to sell TVNZ, acquire MediaWorks or merge the two companies.

The talks come against a backdrop of blockbuster consolidation deals in the media industry, with Sky Network Television and Vodafone last week announcing a $3.4 billion plan to merger. News organisations Fairfax NZ and NZME have also proposed to combine operations.

MediaWorks spokeswoman Charlotte McLauchlan said while the company had started a process to appoint an adviser "to ensure we can capitalise on any opportunities arising from consolidation of the NZ Media market" MediaWorks was not being pitched to potential buyers in New Zealand or Australia.

TVNZ spokeswoman Georgie Hills said: "We've got no comment to make on the speculation about MediaWorks."