I wouldn’t swear to it, but I think those may be Rupert Murdoch’s hands examining Plastic Logic’s thus-far-nameless e-book reader, a Kindle competitor scheduled for release in 2010.

Why would Murdoch, who presides over a media empire ranging from Fox Broadcasting to HarperCollins Publishers to the world’s largest agglomeration of English language newspapers, be caressing an e-ink reading device? Is he contemplating going E with such papers as the Daily Telegraph, the Times of London, the New York Post and the Wall Street Journal? Media reporter Peter Kafka thinks so.

Kafka, covering the cable industry’s annual show, heard Murdoch expressing admiration for the Kindle and ruminating that he might be willing to invest in a Kindle rival.

“At a Q&A at the cable industry’s annual show today,” Kafka reports, “Murdoch waxed on about the Kindle’s qualities, then made a reference to investing in a machine that could be even more attractive – one that boasted a large, full-color screen.” Reconstructing his notes, the reporter recorded Murdoch as saying,

“We need new models. The first inkling of it is the Kindle. You can get the whole paper there. And you can get the whole of The Wall Street Journal on your BlackBerry. We’re investing in a new device that has a bigger screen, four-color, and you can get everything there.”

Not trusting his notes, Kafka checked with a spokesperson from Murdoch’s News Corp and sure enough, it was confirmed. “News Corp. is indeed in ‘exploratory’ talks about making an investment in a company working on e-reader technologies.”

Which device is Murdoch thinking of investing in? Perhaps it’s the no-namer being developed by Plastic Logic, about which we wrote last fall. Though its display is currently black and white, color screens are “on our road map,” VP for Business Development Daren Benzi told The Observer. The plot thickens when you realize that Benzi spent 14 years at News Corp before moving to Plastic Logic. That said, PL already has substantial – $200 million – backing from investors, so do they need Murdoch’s investment too?

Okay, so maybe it’s the Flepia which, we announced just the other day, is in fact developing a color screen. But it too is already capitalized – by Fujitsu.

Could it be the iRex Reader 1000, the potentially Kindle-killing device introduced last year? It’s not in color yet, but a color iRex Iliad has been long rumored.

Rupert-watchers will have a field day second-guessing his thinking. But it shouldn’t be that opaque. Steeped in newsprint though he may be, the shrewd press czar has seen the writing, and it’s not on the wall. It’s on a screen. His romance with e-ink was foreshadowed in 2006 in a speech he gave at the Annual Livery Lecture at the Worshipful Company of Stationers and Newspaper Makers.

What happens to print journalism in an age where consumers are increasingly being offered on-demand, interactive, news, entertainment, sport and classifieds via broadband on their computer screens, TV screens, mobile phones and handsets?

The answer is that great journalism will always attract readers. The words, pictures and graphics that are the stuff of journalism have to be brilliantly packaged; they must feed the mind and move the heart.

And, crucially, newspapers must give readers a choice of accessing their journalism in the pages of the paper or on websites such as Times Online or – and this is important – on any platform that appeals to them, mobile phones, hand-held devices, ipods, whatever.

The possibility of converting paper journalism to electronic must certainly have triggered severe myocardial ischemia among the august members of the Worshipful Company of Stationers and Newspaper Makers, but Murdoch can’t say he didn’t warn them. The cost of producing and distributing newspapers is ghastly. For instance, the newsprint used in one year’s worth of The Montreal Gazette is the equivalent of 186,816 trees. Multiply that by all of Murdoch’s newspaper holdings and the number of dead trees is nothing short of astronomical.

Watch this space for updates.

RC