I'm assuming it's a through lounge. If so I'd be tempted to block the small door so you can get a bigger sofa along that wall and then a loveseat in the bay.
I suspect it's a similar size room/layout to mine and a 40" TV is perfectly watchable from there. Maybe not for movies/games but I'd set the other room up for that.
If you're going to set it up so half the seats don't see the TV then just don't bother with the TV.
I'm assuming it's a through lounge. If so I'd be tempted to block the small door so you can get a bigger sofa along that wall and then a loveseat in the bay.