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I have a Intel Atom PC that I'm shoe-horning into a role as a media server. I have a 5.1 surround sound speaker set that works pretty well. I want to be able to take the optical out from my cable box or PS3 and route it into the PC so that I can play it surround sound. Is there a low price video card that has 5.1 and optical in that works with Ubuntu?

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I use the Terratec Aureon 5.1 Mk.2 USB Sound Card. I've searched for a sound solution for Linux when I became very frustrated by PulseAudio together with the SBLive sound card I used before.

The Alsa Wiki says about this card:

Terratec offers passive support for GNU/Linux. Alsa fully supports this audio device, and several Alsa hackers use it. It is a recommended choice for people needing good sound quality, without investing in a professional sound card.

I only use the standard audio jacks on the box, but it also has an optical in as well as optical out. If you can live with an USB box instead of an actual card, I would recommend this one.

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