U.S. cable TV group withdraws from eBay ad system

NEW YORK (Reuters) - A key U.S. cable TV trade group said on Thursday it would withdraw from an online advertising exchange proposed by eBay Inc. (EBAY.O), dealing a blow to the Web company's plans to build a system to sell ad time.

The Cabletelevision Advertising Bureau (CAB), which represents networks like Discovery, Lifetime and ESPN, said pulling out of the system was the best decision for the industry and its advertisers.

Some of the top marketers had backed eBay's Online Media Exchange, including Home Depot Inc. (HD.N) and Toyota Motor Corp.(7203.T). But the idea also raised concerns that the online system would remove too much of the human element from buying and selling advertisements.

Now, without CAB support, the eBay online exchange would have virtually no cable broadcast time to sell advertisers. The exchange has also planned to sell radio and print spots.

CAB Chief Executive Sean Cunningham said in a statement the group appreciated the invitation to test the system, but cited a number of flaws in withdrawing support.

Cunningham said the exchange had "too narrow an application" and "clear connectivity issues," among others.

"Additionally, the refusal by major members of the agency community to consider this interface reinforced our conclusion that ending our participation was the correct decision for our members and their advertising clients," he said.

An eBay representative was not immediately available for comment.