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Assuming this is not the first time you have used your Apple TV
- You might try restarting the Apple TV by removing ALL the cables for 30 seconds.
- Also try restarting the router.
- If the problem persists, try a restore, you may want to try the previous procedures several times before doing this.
If this is a new Apple TV, it may also be that your network router is not allowing access to the timeserver, check that your router allows access over port 123.
I'm not a big network person, and I couldn't find anything on my D-Link router that said anything about any port being blocked or whatnot. So, forget the router to begin with. Hook up the ethernet to your computer, create a wifi network, and enable internet sharing to devices over wifi. Then just log in to the computer's wifi network and let the device update itself and set the time. After that, just put it back on your router's network. Forget the voodoo babble, just get out the duct tape.
For me, it took quite a few minutes to complete the two updates it needed. I would say get it set up and make sure it's downloading, then go do something else. At times it looks like nothing is happening, but if you don't see it, you won't be frustrated.