HI Everyone,
Here is my fix for this -
I had the same problem and then read on another site somewhere that changing to a short .5m optical cable fixes the problem. I've had a lot of experince in fibre optic termination commercially so I kinda doubted that the length would make too much of a difference especially over a metre or two - but guess what - it does.
The previous cable I was using was 2m and it works fine with other devices but not the Apple TV.
The only conclusion I can come to is that the optic output driver is low level or something strange like that.
FYI it's connected to an archaic Sony shelf system (with mini-disc player - just to prove how archaic) so all this chatter about compatibility and stream formats etc should go out the window as well 🙂.
Note that I have only used the ATV for playing music out of iTunes.
Good luck and I hope it fixes your problem as it did mine.
Regards,
Chris.