UPDATED 2.36pm New Zealand's state broadcaster is in talks with the owners of TV3 about a merger, according to reports from Australian. 

The Australian newspaper today reports TVNZ and MediaWorks are holding discussions.

The paper reports MediaWorks' acting chief executive David Chalmers is 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.

The talks come against a backdrop of blockbuster consolidation deals in the media industry, with Sky TV and Vodafone last week announcing merger plans - and and newspaper publishers Fairfax and NZME also proposing to combine.

The Prime Minister has poured cold water on the suggestion, indicating TVNZ will remain in state control.

Mr Key said the Government likes the concept of competing networks and a merger's not something that's likely to progress.

Mark Weldon resigned as CEO of Mediaworks earlier this year after a tumultuous 20 months in the job, overseeing the demise of several major news programmes including Campbell Live.