How to convert TV optical output to XLR

You can't connect the digital output from your tv to your Ayre because the AX-7 doesn't have a dac. If you have a cable or sat box, you may be able to get analog audio out of that. Otherwise you'll need to get a dac.

In addition to getting a DAC with optical input, you need to make sure that the DAC will convert Dolby Digital to analog. Typical analog DACs cannot do this because they accept only PCM. Unfortunately, most TV outputs are not PCM.

First check if the TV has an option to output digital PCM. If it only outputs Dolby Digital, your DAC will need to support the format or you'll need something like the Gefen GTV-DD-2-AA. No idea how the Gefen sounds.

Like the other guys said.

Step 1 - Turn Dolby Digital into PCM
Step 2 - Turn PCM into XLR

The question is where will this happen.

My cable box can output PCM (although they don't call it that), so I am okay with my DAC.

I didn't have a DAC in an older setup, and the analog output of the cable box was far inferior to the digital, so I used a Digital Surround Processor to do the conversion to RCA. I doubt you will find something like this with XLR outputs though.

I really doubt your TV won't be able to output PCM, but you never know.

Many TVs, including Panasonics, don't even allow to choose PCM, outputting automatically Dolby for ATSC and PCM for NTSC. I bought Samsung LED TV because of that - it has choice in the menu for PCM or Dolby output.