From my limited understanding, Arduino's PWM maxes out at about 500hz. SPDIF needs a data rate of about 6.2 MHZ. EDIT: Although you might be able to get an I2C

From my limited understanding, Arduino's PWM maxes out at about 500hz. SPDIF needs a data rate of about 6.2 MHZ. EDIT: Although you might be able to get an I2C signal out and use that as an alternative to SPDIF.