That brick is really busy and I would fill in the recessed area with dry wall and shiplap the entire wall. Add a mantle and the idea below is easy as well.

Paint the bricks a solid color. Put shelves on each side of the fireplace. Consider leaving the wood panels in behind the shelves. Hang tv above fireplace to hide that peculiar area.

Are you handy enough to do some demo? I would remove the brick at the far ends of the fireplace and use it to fill in the opening above the fireplace. Then I would shorten the hearth to the length of the fireplace. Remove the paneling, paint the walls, then stain the brick to a more uniform color and add a nice chunky mantel.

Hope this helps!

For now I would paint the brick and leave the wood natural. Live in the house for a while, see how you're going to use the rooms.

I recommend removing the brick columns on each end and the brick columns above the fireplace. Drywall over the demo and the existing wood. Add a mantel over the fireplace.

Personally I would tear out the whole thing and replace it with a gas fireplace like I did. The raised brick hearth is dangerous with little ones around, if they trip and fall onto it. It looks like it has old fashioned heatilators and is log fired. If you don't want to do that right away, paint the brick and the wood for the time being.

As a tag on to katinparadise's comment, by removing the hearth extensions on each side, you could add built in units on either side of the fireplace - perhaps one side for a television and the other for family décor.

Thank you so much for the ideas!! I forgot to mention that he are planning on hanging out big TV in the middle so that will cover the middle space.

I would paint the brick a grey (or other solid neutral to your taste) and whitewash the paneling for weathered look. The slant design is more interesting than shiplap with a similar effect so no need to tear it out.

Have you looked to see what is behind the wood? I would do that first, it could change things a little. Also, Is that real brick? It looks too uniform.

The picture you showed would look very nice. I would advise against hanging your t.v. over the fireplace. If you intend to use it, heat is going to come out of the open venting and can ruin your t.v. I would put it to the left or right of the fireplace instead.

I agree there is so much space on this wall, that putting a TV over the fireplace is not necessary.

We had a TV up high like that, it was a literal pain in the neck to watch it. I'd put it on the side for looks and comfort. I personally don't like the wood going 3 different directions, it's a bit schizophrenic, much prefer the peacefulness of shiplap. Restful wood layin' down! I'd also do what was recommended before....taking brick off ends of wall (they distract from center of interest in room...the beautiful fireplace), and put the bricks in the center of fireplace.