I have run into a small problem I can't seem to locate your Theater system any where, the closest I could find was a SC-HT340, as you would need the co-axial ( for Cable/Sat) and then another for conversion to optical audio, I don't see that here ( there is only one co-ax input),
how ever I do see that the TV has 3 HDMI inputs + Component inputs, so unless your Panasonic has HDMI out, you are sorta stuck using the component jacks ( the SC-HT340 has component video/audio on the rear).
Don't know what your budget is, but if you do upgrade, get a surround system, with HDMI ( at least 2 TV-DVD out), then you could by pass the optical all together, and still get superb A/V.
Also your Cable/Sat receiver would need a HDMI jack ( my guess though is that it is a coax). hope I am not confusing you, but let me tell you how mine is set up.
My Sat. reciever has a HDMI jack that goes to my stereo receiver,
the back of my stereo receiver has three HDMI jacks, so now one is used ( from sat. receiver),
there is an out HDMI jack that then goes to the TV.
then the final HDMI goes from the back of the DVD player out to the last HDMI on the stereo receiver for DVD playback.
In your case, your cable/sat.would go from coax to coax on your stereo,(unless it does have a HDMI jack) then a HDMI on your stereo to your TV and the last HDMI from your DVD to TV.