The countries set to benefit from the deal are Samoa, Tonga, Cook Islands, Niue, Fiji, Vanuatu, the Solomon Islands and Papua New Guinea.
"The explanation appears to be that a lot of rugby players come out of the Pacific and they're very keen as the rights holders there to promote more sports. I guess in essence they're hoping there will be more Pacific Islands players who take up rugby," Mr Key said.
NZ Rugby, NZ Cricket and Basketball NZ had also signed up to the initiative for more free television.
He said the Government will put in $400,000 a year to help provide the equipment the islands will need for the ramped up coverage.
All of the major New Zealand television networks and production companies had agreed to provide programmes at no cost to the Pacific.
Mr Key made the announcement from Port Moresby where he is attending the Pacific Islands' Forum leaders' meeting.
Mr Key also announced an extra $100 million in aid to Pacific countries over three years.
He said that took the total aid into the Pacific to $1 billion - about 60 per cent of New Zealand's total aid spending of $1.7 billion over the next years.
"The decision to allocate close to 60 per cent of out growing aid budget to the Pacific recognises the importance we place on our neighbourhood, the challenges we collectively face and the enormous potential our region has."
He said much of that aid would be put into areas that would drive economic growth such as fisheries, tourism and agriculture as well as more tradition aid areas such as health facilities and education.
New Zealand has focused on installing renewable energy sources on many Pacific islands to reduce the reliance on costly imported oil and diesel.
Mr Key said that would continue over the next three years "as we step up our support for climate change adaptation."
New Zealand and Australia have both been criticised at the Forum for the level of commitment they have given on climate change.
