I'm curious what is sent out from the optical digital output to the receiver? I think it is a digital PCM signal. Does this mean the DAC in my receiver does the conversion? I hope so, because it would be a higher quality DAC than what Apple would be using. If Avatar reads this note, what does Apple TV do with 320 kbps AAC? The question is based off this comment on an old thread from a couple of years ago I came across: AppleTV upconverts 128 and 256 Kbps AAC to 16-bit (1411 Kbps), 44.1kHz, Linear PCM. AppleTV also downconverts 24-bit, 48kHz, Linear PCM (2308 Kbps) to 16-bit PCM. Given this, there's no point in storing anything as 16-bit Linear PCM since the system will decompress AAC back to that format anyway. AAC is an excellent perceptual coding scheme, and at 128 Kbps AAC the bitstream is sufficient to reproduce the dynamics of CD audio. I'm going to send the HDMI cable straight to the TV, because I often like to watch sports on TV with no volume and play music instead. If I run the HDMI cable to the receiver, I don't think I can pull this off (if I'm playing my iTunes via Apple TV, I think it would force me to "watch" that instead of DirecTv).