The private company that runs TV3 has been given a $43 million helping hand from the public purse.
The government says MediaWorks was allowed to delay payments on radio licenses to help it out of a financial hole. But questions are being asked in parliament about why public money is being used to bail out a private company.
MediaWorks owns TV3 and also about half the country's commercial radio stations.
Commercial radio requires a radio license but when the recession struck the stations claimed they did not have the money.
"Tipping the whole radio industry or half the the radio industry up to somehow guarantee payments and throwing a whole bunch of people out of work then the media would be saying why aren't you giving these guys a little bit of time to pay the bill," Communications Minister Steven Joyce said.
The government did give MediaWorks time, allowing the company to defer payment on its 20 year radio licenses and effectively getting a $43 million loan from the government.
But Joyce said they have to pay interest on the money and the Treasury rate of interest is 9.5% plus inflation. "They are hardly getting a free lunch," he said.
However Labour's Trevor Mallard said the interest rate was between one half and one third of what banks' rates were at the time for distressed companies.
Nine companies took up the option of deferred payments for radio licences and MediaWorks, which has declined to comment on the issue, was by far the biggest to benefit.
When questioned by Green Party MP Sue Kedgley about whether the government would now end its five year funding freeze on Radio New Zealand, Joyce pointed out that private broadcasters pay for their frequencies and Radio New Zealand does not.
Mallard says the government has not been upfront or transparent. He said while the government released a statement in October 2009 about the arrangement, it did not reveal that MediaWorks is one of the companies involved and did not make clear that it is a deal worth tens of millions of dollars.
And he said the "reports of the government's generosity to MediaWorks come at a time when the government is expected to cut funding to TVNZ 7".
Ironbridge Capital, the major shareholder of MediaWorks, said in a statement that the deferred payment plan was made to all radio broadcasters and several took up the option.
Ironbridge Capital said MediaWorks' balance sheet was successfully restructured 14 months ago and senior bank debt was reduced to $387 million. It said it considered its 2010 result was credible in a tough market and compared favourably to its peers.