The Broadcasting Standards Authority has upheld a complaint over a stunt about prison rape on a commercial music radio station, which involved the Prime Minister as a studio guest.
Mr Key joined in a prank on The Rock on 16 December by getting into a cage and picking up a bar of soap.
As the soap was picked up, the host quoted a line from a recognised rape scene in the film Deliverance.
The Broadcasting Standards Authority has found the stunt was a deliberate reference to prison rape and trivialised sexual violence.
"Sexual violence is a serious issue which affects some of the most vulnerable people in society, including those who are incarcerated," the authority said in its decision.
It said the broadcast went too far and showed poor judgement, breaching good taste and decency and responsible programming standards.
"This was not an off-the-cuff or fleeting joke made on the spur of the moment. Rather, the gathering and use of props such as soap, as well as quoting from the film Deliverance, in our view clearly required some forethought."
The station must now broadcast a statement summarising the decision, and pay costs of $1000 to the Crown.
Mr Key is yet to respond to the ruling, but has previously said he was unaware of the rape references at the time of the live broadcast.
MediaWorks said it accepted the decision and would not comment further.