"Our appraiser advised it would not get a G rating and could not be shown in a 6pm slot, so we asked the producers to make some cuts and changes.
"We had some very robust exchange of views with the producers but they felt altering the show wouldn't work and we had to agree."
Despite the wrangle, Shaw was confident the finished product would appeal to viewers. "We are actually pleased with the series but we will now simply have to gear it towards an older audience," he said.
Terry Teo started as a comic in 1982 before being transformed into a popular children's TV series.
Adrian Bell starred as 12-year-old Terry Teo in the original, which also featured guest performances from former Prime Minister Robert Muldoon and comedian Billy T. James. The revamped Terry Teo has teen actor Kahn West in the lead role.
In the new version, Terry is now 17. He is a South Auckland kid from the wrong side of the tracks whose policeman father has been killed, possibly by the gang that tried to recruit him.
Producer Luke Sharpe, from Auckland-based Semi-Professional Pictures, defended the darker remake.
"Yes, some head-butting went on with TVNZ when we delivered the show but you have to fight for something you believe is great," he said.
"As far as we were concerned it was always going to be for a PG audience and it is not a show for 5-year-olds.
"It is a super-fun action romp and you can't cut the action from an action series. In the end, TVNZ could see it for what it is and we hope New Zealand is really going to dig it."
NZ on Air awarded the series $1.3m in 2013 but said any disagreements about the final content was between the broadcaster and the programme makers.