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I connected my ARC to my Sony TV (XBR-65X850D) via the HDMI4-Arc port. All functions great as long as the ARC is the only device connected to any HDMI input on the TV. The moment I connect my Apple TV / any other device to any other HDMI port, the ARC disconnects. I am not able to control it via my phone either. Once I unplug the other devices, the ARC reconnects and functions normally.

Just wondering if anyone else has had this issue or what could be causing it?

Sounds like some sort of software issue on the TV. My Apple TV doesn’t affect my Vizio at all. Double check that the Sony’s software is up to date, then try rebooting the TV by unplugging it from the wall for two minutes, then plugging it back in. Might be worth trying swapping the HDMI cables around, although I am not sure that using an old HDMI 1.2 cable would cause that issue, you’d just not get any Arc through it. I.e it should work fine from the Apple TV to your TV, but wouldn’t work as the cable between the TV and the Sonos Arc.