Ideally, you dont really want to convert or transcode the MKV file because that (usually) means you are compressing the file again. What you want is to remux the file, with no loss of video or audio quality, to a format that iTunes and AppleTV will be happy with. Full disclosure, I work for a small company that had the same problem, although we were trying to watch MKVs on our PS3, but the same file plays on AppleTVs as well. So we wrote a simple tool. Its $9.99 and available here http://shedworx.com/mkvwatch I hope its helpful for you. If you come across an MKV file that doesn't work, or you have some ideas or feedback we'd love to hear from you.