Sardar Biglari, chairman of Biglari Holdings and one of San Antonio’s most unusual business figures, is back in the news again, this time for reports he is naming himself editor-in-chief of the skin magazine Maxim that he bought at a fire sale for $12 million in 2014.
The news was first reported by Politico last week.
Biglari, 38, is an activist investor who views himself as both entrepreneur and operator. The publicly-traded holding company he founded and controls pursues undervalued companies and assets with the aim of restoring them to growth and profitability. Critics say Biglari is a bottom feeder whose value restaurants, insurance and magazine properties have little in common and that he in investing in businesses for which he has no expertise.
Biglari exudes confidence or arrogance, depending on how you view him. He has little use for critics, some of whom mock him for what they say are inflated comparisons to Warren Buffet, the ultimate holding company investment genius. There is no record of Biglari actually making those comparisons, but plenty of others have noted that Buffett serves as a model.
Unlike Buffett, however, not all of Biglari’s acquisitions have come from friendly mergers or acquisitions. He has made repeated efforts, all unsuccessful, to carry out a hostile takeover of the Cracker Barrel restaurant chain.
But Buffett’s Berkshire Hathaway and Biglari Holdings do share the same initials, and once a year Biglari issues a Buffett-like letter to shareholders. That’s about where the similarities end.
The Oracle of Omaha exudes billionaire folksiness and humility. He enjoys a Coke at breakfast and a burger at lunch, and bridge games with friend and Microsoft founder Bill Gates. He’s also known for his extraordinary commitment to give away most of his $50 billion fortune to philanthropy. Biglari’s letters are brash and self-congratulatory. If he is emulating Buffett’s philanthropy he is doing so below the media radar.
Biglari had made his own fortune in the last decade, although critics say his share of the pie is disproportionately larger than what he returns to investors. Biglari came under fire from some shareholders for his $34 million pay package in 2014 when BH underperformed the S&P 500, but he has easily beaten back such challenges.
Forbes magazine has published a number of articles tracking Biglari, including this April 2015 report about his five-hour showdown with small hedge fund Groveland Capital, which tried and failed to unseat Biglari as chairman and chief executive at the annual shareholders meeting held at the swank St. Regis Hotel in Manhattan.
Biglari earns the big bucks and he lives in the fast lane. He is said to be the son of a senior Iranian military official who once worked for the Shah of Iran until his fall. Biglari drives a Ferrari, lives in the Dominion, and most recently, posed as a model in a photo shoot for Maxim’s December issue that features Victoria’s Secret supermodel Alessandra Ambrosio on the cover.
The shoot took place in Monte Carlo, partly in Biglari’s hotel suite, presumably a business expense. The two-page spread features Biglari seated at an outdoor table on his spacious balcony, dressed all in white, hair slicked back, wearing sunglasses and smoking a cigar. Ambrosio perches and preens on the balcony railing.
A media column in the New York Post about that photo shoot, in which Biglari was called “creepy” for his behavior toward the Brazilian supermodel, led Maxim attorneys to file lawsuits last week against two former Maxim employees for defamation and breach of contract. One of those individuals signed an affidavit denying he was the source of the information and stating that he believed Biglari acted in a professional manner during the photo shoot. The second individual reportedly admitted he was the source. Maxim says he wasn’t even at the shoot. Upon learning the facts, the Post agreed to edit out the reference to Biglari’s alleged behavior.
The bigger challenge for Biglari is not image, it’s that Maxim is a drain on profits. BH includes four major businesses: family-style restaurant chains Steak ‘n Shake and Western Sizzlin’; First Guard Insurance; and now, Maxim magazine. Most of the holding company’s growth can be attributed to the cash flow generated by Stake ‘n Shake, an underperforming chain when Biglari bought it in 2008 that now has 544 locations, 417 of them controlled outright by BH. Each one features a framed photo of the chairman on the restaurant wall. Western is a franchised chain with 75 locations, only four of which are BH-owned.
According to Biglari’s letter to shareholders in 2014 (the 2015 letter should be released later this quarter), Steak ‘n Shake was losing $100,000 a day in August 2008, but has since recorded 23 consecutive quarters with rising in-store sales.
Biglari, a Trinity University graduate, works closely with business partner Phil Cooley, his vice chairman, another similarity to Buffet and the trusted role played by friend and vice chairman Charlie Munger. Cooley, it is said, was a business professor at Trinity who had Biglari as a student and left his teaching career to work with him building Biglari Holdings. Biglari reportedly finished at the top of a Trinity student poll some years ago as the small liberal arts school’s most recognizable alumnus, although the Ranker celebrity graduate website only affords him its #48 ranking among alumni.
Amid his business challenges, entering the shrinking world of magazines built on photo spreads of naked women posing provocatively is an odd investment choice. A self-appointment as editor is another. Playboy, which at least published enough serious journalism to allow some in the ’60s and ’70s to lamely claim they bought Hugh Hefner’s magazine “for the articles,” is getting out of the nude centerfold business. Penthouse, best known in decades past for its gynecological visual detail, has faded from view, undone by Internet porn.
When he bought Maxim, Biglari promised to elevate it from its “lad mag” roots and create something that could compete with Esquire or GQ. Even magazines like Esquire, with an 80-year pedigree and the power of Hearst, struggle as print products in an increasingly Web-driven economy. Even if Biglari did have the resources to compete against the big boys, why would he? Does the market need or want another Esquire? Doubtful.
Biglari’s multimillion dollar gamble on a more upscale magazine fell flat. Editor Kate Lanphear, lured way from T: The New York Times Style Magazine with a salary said to be $700,000, was out six months after last year’s relaunch. Maxim as a tamer, more upscale monthly failed to win the luxury advertisers and newstand sales plummeted. Lanphear won critical praise in the New York media for the makeover, but as a business move, it was a flop.
By December, media reports suggested Biglari already was operating as editor, taking the magazine back in the direction of females posing in various states of undress. Maxim’s website offers news stories available everywhere else (Mexican druglord Chapo Guzman captured, homo sapiens had sex with Neanderthals) that provide cover for the topless slide shows and the kind of features that would be hard to defend at a Dominion dinner party (‘The Straight Man’s Guide to Lady Masturbation,” “Man with Bionic Penis Will Have to Wait Even Longer to Have Sex”).
In an era when men of all ages can click through endless videos and slide shows of celebrity sex and free porn, it’s not likely that magazines that might have titillated 50 years ago have a promising future. However glamorous it feels now to hang with supermodels in European capitals, Biglari is likely to learn quickly that the job of magazine editor has a higher failure rate than holding company chairman. It’s a hard act in New York. It will be even harder to do it in San Antonio.
Editor’s note: An earlier version of this story did not include the information that the New York Post corrected its media column after it’s accuracy was challenged by Maxim.
*Top image: Maxim’s December/January 2016 issue features an almost entirely nude Alessandra Ambrosio, photographed by Gilles Bensimon for Maxim.