But another organisation that loomed larger over the discussion was Facebook, which takes a growing share of advertising, despite not producing news content.
Fairfax executive editor Sinead Boucher said Facebook was an "enormous competitor". It could use its algorithms to control what news reached people, and actively tried to reduce the influence of news organisations over that.
NZME managing editor Shayne Currie said Facebook founder Mark Zuckerberg was "by far the world's most powerful editor" and presided over a "phenomenal beast" that was "100 per cent our main competitor and constraint".
Commissioner Sue Begg asked, given that, whether competition with Facebook and content on it "would drive you to have more cat videos on your website?"
Currie cited a recent investigation into the hair trade in China that took months and significant investment, and said every editor in the country was striving to produce quality, unique journalism.
"A lot of people's views of the quality of journalism in this country comes down to the first 12 stories on a homepage ... that is like an iceberg. It is the 10 per cent of what lies beneath which is the 90 per cent of other great content.
"But people talk about cat videos because that's what they click on, unfortunately."
NZME chief executive Michael Boggs said the company wanted at least 25 per cent of its content to be planned and unique, and was currently at about half that.
Currie said the merger could aid the production of quality journalism.
"At John Key's press conference yesterday we saw 20 journalists from probably 12 different media organisations ... you have to ask yourself, is that the best use of resources for employers?"
He suggested a better approach would be having fewer journalists there for live news, and others focussing on exclusive content.
Both NZME and Fairfax representatives submitted there were low barriers to entry in online news.
Boucher cited the success of The Spinoff, saying it now had more than 500,000 readers: "That is a quarter of Stuff's traffic, within a year or so growth".
NZME and Fairfax said all major outlets were producing digital news, and were no longer segregated into "print" or "broadcast".
Counsel for TVNZ and Mediaworks told the panel they did not consider themselves to be able to be a competitive constraint on the proposed merged company any time soon.
They will today provide evidence related to this in a closed session.
Mediaworks corporate counsel Alex Nicholson said although everyone in the industry now accepted the "digital first" approach, in reality it was very difficult to go from a broadcast company to a digital news one.
Companies like NZME and Fairfax that came from a newspaper background had a sizeable head start, Nicholson said, and people used to writing for TV or radio had a significantly different skill set.
The Commerce Commission last month issued a draft determination rejecting the proposed merger on the basis it would threaten the range of voices, opinions and issues that the news media might cover, therefore producing an outcome not in the public interest.
The commission's final decision is expected in March next year.
Last month, 30 editors at NZME and Fairfax signed an open letter to the commission that stated their "deep concern" that rejecting the merger will "inevitably spell the end of our ability to maintain quality national and local journalism at scale for New Zealanders".
A group of 11 senior journalists, including former Herald editor Gavin Ellis and former Sunday Star-Times editor Suzanne Chetwin, submitted to the commission that an already shallow media pool must not be diminished.
Their submission said New Zealand already suffered from a "dearth of serious content and analysis".
STATE OF THE MEDIA
Commissioner Elisabeth Welson is this afternoon chairing a discussion about the current state of the industry.
Currie said for the printed Herald there had been a circulation decline of about 8 per cent in the past 12 months, but said total audience - print and digital - was at record levels.
About 50 per cent of mobile traffic now came through Facebook, and only 13 per cent of New Zealanders now use a newspaper as their primary source of news, Currie said.
Content would be changed and packaged differently depending on the medium.
On the decline of print, Boucher said, "there are no new print subscribers coming on at all", and added that young people largely used social media to receive news.
A challenge newsrooms faced was declining revenues, but with a wider audience to cater to over a wider number of platforms - mobile, web, print and social media like Snapchat.
That outlook was countered by Grant McKenzie, chief executive of Allied Press, publisher of the Otago Daily Times, who said their circulation had dropped about 21 per cent over the past 10 years - a relatively good performance.
He said that could be because his company didn't have a digital first policy.
"Why wouldn't it decline when you are putting everything online for free, and there is no incentive to buy a newspaper?"
