Since I ran into this issue as well and figured out how to solve it, I thought I’d update this thread for anyone else that may run into the problem in the future. First, it is not clear whether the issue stems from an update to the Apple TV or the LG C9 set (or possibly other LG sets as well), but the issue was not present since the beginning and so was introduced through updates. Now on to the problem.
LG C9 has two modes for audio pass through, either Bitstream or LPCM, and offers two connection modes, ARC and eARC. ARC is only capable of carrying 2 channels of lossless signal, while eARC can carry 7 channels of lossless signal without issues. What Apple TV does is it decodes the 5.1 signal and passes lossless LPCM downstream (lossless is used loosely here since the original signal was lossy, hence lossless is just a term for “uncompressed”). The problem is that at some point either Apple TV stopped passing metadata to the LG C9 that would tell it that it is really receiving 5.1 multichannel audio, or LG implemented a change in the firmware that led to this. (To make matters more frustrating, appropriate data is being passed when Atmos is in question.)
Anyway, when using ARC on the LG C9, the absence of any additional metadata means that the data stream contains more data than can be passed on using ARC, hence it downmixes to 2.0 channels only and passes that via ARC to the AVR. (On the other hand, if one is using eARC, LG will just pass through the full LPCM stream to the AVR, as long as the AVR too has eARC.) More details on ARC and eARC are below.
https://www.cnet.com/news/hdmi-audio-return-channel-and-earc-for-beginners/
So what is the fix? Really, only a few options are possible. First option is to use eARC instead of ARC if possible. Second option is to go ATV > AVR > TV. Third option is to extract the audio stream from the ATV signal and split it off to the AVR while sending video to the TV using an HDFury AVR Key or Vertex device, is similar. Fourth option is to use a device like Thenaudio SHARC eARC to “add” eARC capability to a signal stream to a receiver that is only capable of ARC, thereby allowing eARC to be enabled on the LG C9. No other fix is possible.