This is a suggestion that has worked marvelously for us - although it's not cheap. We have a projector tv. The screen is mounted on the ceiling in a bay area. My husband made a soffit to go in front of it so unless you're standing behind it in the bay area, you don't see the screen when it's in retracted. We don't have windows in this area because it's actually under the dining room bay window. The projector is attached to the ceiling, but I've seen them on the top shelf of bookcases. We love this solution because then the room isn't arranged around a large object that when 'off' is otherwise useless (and unattractive). I personally don't like entertainment centers because it just makes it take up more space - and most people leave the tv exposed anyway. The only issue with a projector tv is that you need the room fairly dark when watching so you would need some window coverings or shades that are room darkening. Man, is it ever great for popcorn and a movie, though! We haven't been to a theatre for a single movie since we did this.

Just a regular Demolition contractor would do it. I don't see why it would require a permit, but, the only way to really find out is to ask your local building department. The reason I say it's tricky to do yourself is because you will be working at a considerable height to begin with (on a ladder that may be supported by the very structure that you are dismantling) and falling/collapsing bricks can cause damage (place a piece of plywood over the adjacent roof for protection). If you are willing to do this then get up there with a small sledge hammer and knock off the bricks a few at a time. It will get pretty dirty since the inside of the chimney will be coated with soot and creosote. You will probably also want to remove the foundation (which is most likely a concrete slab with footings and reinforcing steel). Rent a jackhammer for that and of course you will need a heavy duty dumpster to throw the debris into. Good luck.

My usual strong preference for rooms that are meant to be lived in is to plan them to serve us in a variety of ways, and floating a couch in the middle of a normal-size room focused only on a TV, its back to...nothing, is so limited. Doesn't matter how many people have been doing this, there's more to family living than watching TV and a living room needs to accommodate other activities. Like chatting quietly with a friend, sitting together or on the phone. Organizing a club project. Building a dinosaur while dad keeps an eye on the TV. If it were mine, I'd sell the entertainment system and probably put a couch on that end wall, consider reconfiguring the sectional so the short piece backed to the wide top doorway, but the long stretch facing out into the room. Flat screen TV on the short wall in the lower left corner (happily hidden from entry too). Easy chair, or even two, in the middle (swiveling?). A secondary conversation area (chairs or chair and loveseat) by the fireplace. Or a reading corner and in the other perhaps a small card/games/project table or a desk and chair (facing out into the room). All open and sociable. The idea for a backless sofa is also an extremely nice one, but with the combination of a normal-size room and all those doorways/fireplace I would personally definitely pass on two full sofas with backs and otherwise keep the arrangements nicely open to each other for active living. (No neck strain from trying to admire the dinosaur without getting up.)

Adding to Kudzu's caution about the back of the bookcase probably being thin material (quarter inch or even less), you need to know for certain how the bookcase assembly is secured in the opening. It could be lightly fastened to studs on either side aided by a friction fit. Likely there is no stud behind it (in the center; the recess could have been framed to the size of the bookcase, possibly with a header if this is a supporting wall. Rare earth magnets can help locate fasteners when a lot of stud finders fail. If you are determined to put the TV there, the smart thing to do would be to pull the bookcase out of the opening so you absolutely know for sure what you are working with. One other approach would be to look for fasteners on the other side of the wall if the fireplace is situated on an interior wall.