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The Titanic Proves Its Worth

April 15 will mark the 100 year anniversary of the tragic sinking of the Titanic after it struck an iceberg and sank on its ill-fated journey in 1912. More than 1,500 lives were lost, which amounted to over two thirds of the 2,228 on board at the time of the tragedy. Built at an estimated cost of $7.5 million in 1912, in today's dollars it would cost roughly $400 million to construct. The vessel sat untouched at the bottom of the North Atlantic Ocean for more than seven decades until it was discovered by a joint American-French expedition in 1985.

Artifacts Recovered
Since that time, numerous expeditions have studied the wreckage and collected a wide array of artifacts. The organization RMS Titanic, which is wholly owned by publicly traded Premier Exhibitions (Nasdaq:PRXI), was granted salvor-in-possession rights to the wreck and has since collected roughly 5,000 artifacts over eight missions during the past 25 years. The artifacts have gone on display throughout the world through an expedition called "Titanic: The Artifact Exhibition," providing Premier Exhibitions commercial revenue from its fortuitous position as the rightful owner of the Titanic's possessions and its mystery.

In an interesting twist, in January the company announced that it decided to auction off the 5,000 artifacts it has collected. The original plan was to hold the auction right around the 100 year anniversary of the tragedy, but the company has since detailed that it is in private negotiations with a number of parties. The plan is to also sell the artifacts in a single transaction so as to "ensure the collection will be properly maintained and available for public display."

High Value
When Premiere announced the auction, it cited a 2007 appraisal that estimated the value of its artifacts at $189 million. It has been speculated that the current auction will result in a total sales price in the neighborhood of $200 million. Combined with touring revenue, it's fair to say that the find has been extremely lucrative to RMS Titanic as well as Premiere. Of the 5,500 artifacts in the company's possession, it owns approximately 2,000. The major stipulation is that all the artifacts have to remain a single block together.

As of the end of last year, Premiere offered seven Titanic exhibitions, including a stationary one in Las Vegas and six that regularly tour throughout the world. The exhibition has been seen by about 23 million attendees, but has been experiencing declining attendance over the past few years. Premiere doesn't break out the Titanic exhibition with its other shows, but did report total sales of nearly $45 million last year. It also reported a loss of more than $12 million as overall attendance declines.

The commercial appeal of the Titanic story has also proven quite lucrative for other parties. There are numerous other Titanic exhibitions and the movie "Titanic" has likely collected more than $2 billion at the box office, including a recent viewing to also commemorate the 100 year anniversary.

The Bottom Line
The last living survivor from the sinking of the ship reportedly passed away in 1999 at the age of 97. However, the story of the Titanic remains as popular as ever and will likely continue to generate commercial appeal and revenue for many years to come.



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