I’m not a decorator and I don’t know if there is room in the soffit with it enclosing a beam, but my first impression was to make the area look like it is encasing the television by adding lights that are dimmable. Recessed lights would look great but may need to be a different type.

Great suggestion! I love the idea of actually building the wall out to have it blend in. Thank you so much. And yes, recessed lights are definitely the dream. Hoping we can save up soon for that project. :)