Balance not fading speaker

Strange. ARC SP-12 is not fading the opposite speaker down when turning the balance knob. It seems to eliminate one of the channels but the sound level through each speaker remains constant.

Also seems to be operating in full stereo when balance is even. I have a subwoofer hooked to both channels on the amp speaker outputs. I turned the sub off (internal amp)and there was no change.

Any ideas would be appreciated.