Hi Nick
Yes, optical connection will not give you lossless sound, so you need to send the signal from you Blu Ray player through the receiver via HDMI to get optimum results. You really should do this because the results are impressive.
What I've found -- this is my only gripe and was also true with the Denon 1910 -- is that the 1065 will only pass through a 1080p video signal to my Panasonic G10 plasma. So every time I want to use the PS3 I have to engage the Yamaha. This shouldn't cause you a problem with your sky box though. Sky, as far as I'm aware, only broadcasts DD 5.1 at best, so an optical cable is fine for this function... you don't have to watch Eastenders in full surround sound!
Yes, optical connection will not give you lossless sound, so you need to send the signal from you Blu Ray player through the receiver via HDMI to get optimum results. You really should do this because the results are impressive.
What I've found -- this is my only gripe and was also true with the Denon 1910 -- is that the 1065 will only pass through a 1080p video signal to my Panasonic G10 plasma. So every time I want to use the PS3 I have to engage the Yamaha. This shouldn't cause you a problem with your sky box though. Sky, as far as I'm aware, only broadcasts DD 5.1 at best, so an optical cable is fine for this function... you don't have to watch Eastenders in full surround sound!