Newshub employees were given the devastating news in an all-staff meeting on Wednesday morning first reported by the NZ Herald.
Three is New Zealand's only rival to public broadcaster TVNZ.
It has been owned by American powerhouse Discovery in 2020, which merged with Warner Bros in 2022.
A company statement said it had begun consulting with employees on a proposal including "the closure of all Newshub's multiplatform news operations and output".
"New local programming would only be in collaboration with local funding bodies and other partners."
Consultations on the closure will take place next month, with a final decision by April.
Newshub operate with a punchy tabloid news breaking style, often bringing journalists into conflict with the government.
Some of New Zealand's most recognised and talented journalists work for the broadcaster, including political editor Jenna Lynch, Paddy Gower, Ryan Bridge and Michael Morrah.
While Wednesday's announcement shocked employees and the media industry, it is not wholly unexpected.
The NZ arm of Warner Bros. Discovery's operations posted a $NZ34.8 million ($A32.8 million) loss last year.
New Zealand is currently in a technical recession, with other media companies announcing job losses or hiring freezes.
"There was no single trigger that caused this, rather it was a combination of negative events in New Zealand and globally," Warner Bros. Discovery executive James Gibbons is quoted in the NZ Herald.
"Advertising revenue in New Zealand has disappeared far more quickly than our ability to manage this reduction, and to drive the business to profitability.
"Everyone can see that the media sector, here in New Zealand, and around the world is facing some very tough circumstances.
"While Warner Bros. Discovery is a large global media company, each business is managed on its ability to sustain itself within the market it operates in (and) subsidising losses for ongoing years indefinitely is not sustainable."
Three still plan to make local television content, as well as broadcast other series such as Married At First Sight Australia and The Block Australia.
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