@OtisI agree with this. Too much wood in there anyways makes it very heavy feeling....removing the wood panels above the mantel and just filling that space with a big ### mounted TV angled down a bit is the best of both worlds.
I personally wouldn't recess anything though as Jaysus suggests. There are plenty of TV mounts that hug the wall closely (2" away), but then allow you to pull out and angle the screen, etc when want better viewing angles. Then just push back flush straight against the wall when not using. The lightweight of TV's these days making moving TVs on a wall mount a breeze. Don't limit yourself or make it harder by making a recessed area.
The wood mantel, wood on sides of firebox and the shelving flanking each side along with the wood crown molding is good balance where you can get rid of those panels, drywall it, paint it black (to match the firebox and tv frame) and cover 90% of it with a sweet TV. Especially this being your main TV viewing area. While you're at it, wire in and mount speakers in that space above mantel too. Would look sweet. Probably about $5K.