NZ On Air was right to put taxpayer money into New Zealand Idol and remains first in line to be repaid, says the agency's chief executive Jo Tyndall.
The Government-run funding agency has been criticised for putting $450,000 into the local production of the international Idol franchise won byBen Lummis in May.
NZ On Air is expected to spend almost $62 million on New Zealand television productions over this financial year, up from $59 million over the previous year.
Ms Tyndall said she had never claimed NZ On Air was guaranteed to get its money back, an outcome dependent on Television New Zealand showing the series had made a profit.
She said her agency was asked to provide financial assistance last year when TVNZ was still trying to secure sponsorship and funding to produce the show.
New Zealand Idol, one of the highest rating shows of the year, may not have gone ahead without the cash injection.
While the show polarised opinion between those who considered it to be televised karaoke and those who viewed New Zealand Idol as an updated talent show, Ms Tyndall said it had opened up potential music careers for "ordinary New Zealanders".
Following his win, Lummis released a single and album which each went to number one on the charts. Runner-up Michael Murphy is about to release his first single.
TVNZ is yet to provide a report on the series' financial performance, but the NZ On Air CEO did expect costs to exceed initial predictions as the broadcaster had extended the show's run from 16 hours as originally planned, to 22 hours.
National Party broadcasting spokeswoman Georgina Te Heuheu has joined critics of the funding decision who claim the agency should never put money into shows using an overseas format.
She has accused NZ On Air and TVNZ of stitching up a secret deal to write-off the loan which will cost taxpayers a "significant" amount of money.
Broadcasting Minister Steve Maharey declined to comment as the outcome of the loan would not be known until the TVNZ report was released.
Ms Tyndall said NZ On Air had funded two previous shows, Colonial House and Pioneer House, which were based on imported formats.
NZ On Air funding is intended to promote and foster the development of New Zealand's culture.
