Why grainy home video exported from itunes

All my pictures and movies that have been purchased and downloaded from itunes have looked great!!!
But today, I made some home videos on my Canon Zr800 video camera, and exported the video to Apple TV via IMovie/Itunes.
The result was a very grainy video. It was very poor quality. However, when we watch the same home video via IMovie on our imac computer, the video looks great. It only looks poor when viewing it on our tv via Apple TV. Any thoughts???

when i tried to create a new project just now...it came up as dv widescreen...that is probably the one i used
You are likely correct, I also assume you have used DV widescreen and I assume your source is WS as well, or you would have ended up with your movie stretched or pillarboxed. I would say you are using the best project settings, if you'd chosen another project type, there would have been a lot of unnecessary conversions happening, which would lead to lower quality.
I use the DV settings for my imovie projects, however when I export to tv I get interlacing problems (alternate lines across the picture are out of sync on high motion video), my solution is to use export to full quality and then send the result through streamclip. Maybe you might need to do something similar to solve your issue.
Just a couple of things to check first. Make sure your imovie prefs match your location, if your source is NTSC then ensure your project frame rate is 30 (25 for PAL), could you also open the finished movie in Quicktime (just drag and drop onto the QT app) open the movie info window and tell us what it says.

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