Is that an electric FP if so take it out . I need more info as to how many seats you need for sure.

Get rid of the "fireplace" . Hang art in its place. Purchase a two seater with chaise sectional, corner the t v , add a coffee table and a chair.

In other words, use this photo as your inspiration.

It is not an electric fireplace. I’d like to be able to sit 4-5 people comfortably

I'd remove the fireplace completely. If you can't or don't want to remove it, found out what the codes are for how low you can safely move the mantle to mount the TV above it. You could then float the sofa facing the fireplace/tv with two armchairs where you currently have your sofa. You don't have enough space for any additional seating if the tv is mounted in the current location.

Submit a measured floor plan, including windows and doors plus the pony wall.

Horizontal line maybe at top of ceiling - consider a paneled material of some kind from left edge of brick all way to right. Mount tv on that wall. [Many hang curtains from top of wall, and the line could be go with it.]

Custom expert would know if possible... my idea is to install veneer, etc.. that wraps around the corner, and make it a 'whole.'

houzz: "Media Cabinet in Maple Veneer with a warm Stain, Lacquer finish. TV in Upper Cabinet."

Tiburon Contemporary Master Bedroom & Bathroom · More Info

You could turn the couch to look out the window And place chairs at the window or beside the couch and leave the TV where it is

Drywall what and put the sofa where? And what about a light gray color for the walls?

Facing the window the back along hall. You can walk behind it.

@Grace Knox As I understand @decoenthusiaste suggestion, it’s to drywall what looks like a pass through to kitchen? at the right side of your first picture. Then it’s to place couch along that wall. What’s unknown is how long either your couch or the wall is & if doing that will block hallway. I think it would help if you’d draw out the room with dimensions & post more pics from different angles. There‘s lots of guessing going on here about the size of your space.

Gray on the walls is not going to look good with your floors and doors. Stick to nuetral or warm whites.