Key Points:

Television New Zealand is to be stripped of the power to decide how it spends more than $15 million in charter funds after angering its government bosses.

Broadcasting Minister Trevor Mallard told The Dominion Post he wanted the network to apply to funding agency NZ On Air on a programme by programme basis to use its more than $15.1 million a year in charter funds.

There would be no guarantee it would be granted the full amount.

The charter funding aimed to help the network fulfil its public broadcasting responsibilities, for example by screening local content programmes that reflect New Zealand culture.

TVNZ plans to use charter funds to help fund the production costs of broadcasting the Beijing Olympics upset Mr Mallard.

Direct Government funding had not been used in the bid for the actual rights to screen the Olympics, TVNZ spokeswoman Megan Richards said.

"We have never used government funding to bid for sporting events," she told NZPA.

Bidding for the rights to the 2000, 2004 and 2008 Olympics was conducted before there was a charter, Ms Richards said.

TVNZ was "comfortable" with the Government's proposal requiring NZ On Air to approve funding on a per programme basis, she said.

Such a move would add "clarity" to the funding process and the state broadcaster was already discussing the proposal internally, Ms Richards said.

Mr Mallard said the new funding process would be given a one-year trial "with a no-penalty arrangement" and be implemented fully from July next year.

A memorandum of understanding would be struck with TVNZ on what would be approved and what would miss out on a programme by programme basis.

The new rules would not affect use of the money for this year's Olympics, or other programmes in train, or where TVNZ had made commitments but would ensure appropriate use in future.

Former TVNZ news boss Bill Ralston told the newspaper the change would put more of NZ on Air's agenda on screens. It would, however, stop TVNZ "snaffling straight Government subsidies" for programme such as sport, current affairs and entertainment that were commercially viable.