Key welcomed the departure of breakfast show host Paul Henry, who announced yesterday that he was quitting his job, but denied pressuring state broadcaster TVNZ into letting him go.
"Those decisions are made by management and the board of Television New Zealand and, to the best of my knowledge, there was absolutely no pressure or contact made," Key told commercial radio.
Henry sparked outrage in India when he mocked the name of Delhi Chief Minister Sheila Dikshit and added "it's so appropriate because she's Indian".
Indian summoned Wellington's high commissioner in New Delhi to a meeting last week where External Affairs Minister S M Krishna condemned the comments as "racist" and "unacceptable".
Key said New Zealand had a strong relationship with India which would not be harmed by the incident.
"I don't think we should put one broadcaster's comments on the table and say it's going to substantially damage our relationship with India, I don't believe it will," he said.
Before Henry's Dikshit comments surfaced, he had already been suspended for questioning whether Governor General Anand Satyanand, who was born in Auckland to Indo-Fijian parents, was a proper New Zealander.
Henry's remarks about Dikshit went largely unnoticed until TVNZ included the footage in its website's highlights section. Since then, it has been viewed more than 400,000 times on YouTube.
It was the latest in a series of gaffes by the outspoken host, who last year described British singer Susan Boyle as "retarded", said gays were "unnatural", and accused a female guest from Greenpeace of having a moustache.
In a statement yesterday, Henry apologised for his comments. "I am astonished and dismayed that my comments have created a diplomatic incident," he said.
"My style is conversational and of course unscripted. I walk the finest of lines and accept that I have inadvertently crossed it from time to time."
TVNZ chief executive Rick Ellis has also apologised to India.
