Sep 22, 2006  |  By: JOSHUA LYNSEN  | COMMENTS     

Jeff Balk, the publisher of EXP Magazine, has sued the company that bought and then allegedly abandoned the gay publication.

Balk is seeking $1 million in punitive damages from Ethan Interactive, which acquired the Rehoboth Beach, Del., magazine in April. Ethan Interactive later canceled the purchase, throwing EXP into financial turmoil.

In the lawsuit, Balk also seeks more than $25,000 from Ethan Interactive for breach of contract and breach of fiduciary duty.

EXP Magazine — a gay lifestyle publication with a monthly circulation of 43,000 — remains in print. Its latest issue was distributed Sept. 15.

“We’re continuing to publish to mitigate the damages,” Balk said in an interview with the Blade.

The lawsuit, filed Aug. 21 in the common pleas court of Franklin County, Ohio, says Ethan Interactive unlawfully rescinded its purchase contract with Balk.

It says the deal, struck by Ethan Interactive subsidiary Out in America, was canceled with little explanation and no legal justification. The suit says Ethan Interactive cannot simply undo its acquisition of EXP Magazine, and such action constitutes a breach of contract.

Jonathan Mabry, Out in America’s marketing director, would not comment on the lawsuit. He deferred to attorney John Ferron, who did not return a call seeking comment.

Ethan Interactive had not filed a response to the lawsuit by Blade deadline.

Balk, who was issued stock in Ethan Interactive as part of the deal, also seeks in his lawsuit to stop the company from “issuing any resolution that could in any way affect” his interest in the company.

In a recent EXP column, Balk, who is gay, said he took the legal steps to protect himself and his magazine.

“According to my lawyer, Ethan [Interactive] cannot just unwind a transaction,” he said. “Their actions are without any legal basis.”

Talk show host exposes
publisher’s criminal past

Troubles at EXP Magazine began after a radio talk show host at WGMD, a Rehoboth-based station, exposed Balk’s criminal record in June.

Balk, 48, spent seven years in jail in Missouri after being convicted in 1988 of sodomy and 11 counts of deviant sexual assault.

According to the St. Louis Post-Dispatch, Balk confessed to engaging in sex with five teenage males, ages 13 to 15. The paper said the youths met Balk in 1983 when he managed a miniature golf course in St. Louis.

Balk was released from prison in March 1995. He launched EXP Magazine in 1996.

WGMD talk show host Dan Gaffney discussed Balk’s criminal record on the air in June. In the aftermath of that broadcast, Out in America and Ethan Interactive backed out of plans to purchase EXP.

“A recently conducted in-depth review of EXP Magazine and its publisher revealed that it is not a good fit for Out in America’s current business model, built on the mission to be the most respected LGBT media property,” the company said in a June 29 statement.

Balk said the deal, which was sealed in April, likely collapsed due to the WGMD broadcast.

According to his lawsuit, Balk was contacted around the time of the broadcast and asked if he wanted to “forget the whole deal.”

The lawsuit says Balk, who at that point owned 20 percent of Ethan Interactive, accepted a $450,000 buyout offer. But that offer was rescinded soon thereafter, and Balk’s stock certificates were promptly canceled.

Balk said Ethan Interactive then severed all ties to EXP Magazine.

Loss of advertisers

The lawsuit says the events had “a devastating affect” on EXP Magazine.

Balk said the magazine, which is distributed in 11 states and Washington, D.C., saw two major advertisers cancel their contracts. Several others opted not to renew.

“We lost our centerfold advertiser in Denver due to this conflict,” he said. “He canceled his contract mid-stream.”

Additionally, Balk said Ethan Interactive stopped paying EXP employees in June. Paychecks are now being issued from an EXP bank account.

Balk said that despite the mounting legal and financial problems, EXP Magazine has received overwhelming outside support.

But even with such support, EXP faces an uncertain future. Balk said he plans to continue publishing the magazine in the months ahead.