This has been talked about some, I know I've posted some thoughts in a few topics, but your particular equipment setup would be of interest to know what to possibly recommend.
If your basic cable is Standard Definition analog, then the sound would be 2 channel stereo that could be decoded by any standard external DAC with a Toslink input.
If your cable is High Definition digital (or ATSC over-the-air digital), then the majority of programs will carry Dolby Digital 5.1 multichannel sound, which will require a DAC that can decode Dolby Digital. Any surround receiver or processor can decode it, but there are very few stand-alone Dolby Digital DACs.
The digital audio output from some TVs, including my Panasonic plasma (and many Panasonic plasmas) does not have a menu option to select 2 channel PCM stereo vs multichannel output. If your particular TV does have that ability, then any external stereo DAC would work. If you are using a cable box, they usually have a menu setting to set the digital audio output to 2 channel PCM, but if you just have basic cable, I assume you are probably going directly into your TV with the cable?
I'm also assuming that your A/V system is either a stereo-only receiver or integrated amplifier, hence the request for an external DAC.
The FiiO mentioned above is one of a very few available digital multichannel DACs that would work. Another is the Gefen GTV-DD-2AA, but the Fiio decodes Dolby Digital and DTS, whereas the Gefen is Dolby Digital only. Not sure if there is any DTS on cable, but if the cost is similar might as well have the capability. There are also some older stand-alone Dolby Digital/DTS decoders about the size of a slimline DVD player that were available years ago from manufacturers like Panasonic, and those can be sometimes be found on eBay and Craigslist for next to nothing.
Steve
