Broadcasting Minister Craig Foss says radio station KiwiFM is entitled to reduce its New Zealand music content to 60% under a new agreement with the Government.
In 2006, the MediaWorks Radio-owned station was granted three FM frequencies by the Government. The frequencies had been intended for a youth radio and a Maori radio network.
From Monday, KiwiFM was cutting its quota of local music from 100% to 60% because it said it had been losing money.
The head of radio at Auckland University of Technology, Matt Mollgaard, had questioned why KiwiFM was still allowed to keep the frequencies.
Mr Foss says the station was required to play entirely New Zealand music under its intial deal, but KiwiFM changed that provision to 60% when it re-signed its licence with the Government in March 2011.
Labour Party broadcasting spokesperson Clare Curran says it seems as though the change was made very quietly away from the public eye.