Amer, I don't have the 787, but the Onkyo specs state that it does THX Surround EX, essentially the same as the 797 and supplies a 6th back surround channel. The owner's manual makes the point that it's necessary to select THX as the listening mode, as Sam states in the final paragraph of his opening message. Have you done that and carefully followed the other instructions for THX in your owner's manual?

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Enjoy the music, not the equipment.