Help with apple 3, version 5.1 resolution settings won't change

Just bought Apple tv today, Jan 2013.

My television is a JVC Model HD-P70R1U 70", which is 1080p (about 5 years old). I also have my Itunes set at 1080p preference.

BUT I streamed a netflix move (tried three) and it streams in 720p. I went several times to menu/settings/audio visual/TV resolutions.

The auto is checked. But underneath the apple tv pic it shows 720p. So I clicked on 1080p/60hz yet it WILL NOT change and remains on 720p.

Soooooo, I have a 1080p television, a new apple tv, itunes is set for 1080p, yet I cannot select and change my apple tv setting to 1080p. My netflix movies are therefore, too big and not clearly focused.

ANY OTHER IDEAS? Many Thanks folks!