If you have the budget and are able to, I'd definitely get rid of the FP and the nook and reposition the fireplace flat on the wall. What you have here just looks like awkward and kind of, "huh?" I'd then position the TV on a low-ish console next to the FP (not above it).

I totally agree it is a very awkward space. Would you recommend getting a whole new fp unit or just re-positing the existing unit?

I'm always a fan of reusing what you already have, but it's hard to tell what type of FP you have there -- looks like it's a corner unit? (if there is such a thing). So, I'm not sure how deep it is. And, I'm not sure what type of decor you've got going on in the rest of the house. For my taste, I love a stacked stone surround, but that might be a little rustic for this space.

I believe it is just a regular fp set on an angle surrounded by stucco and tile. I do plan on rustic design and I agree, I am also a fan of reusing the fp.