Apple TV is struck on step 1 of an update “preparing update”. How do I resolve this problem?

Try the Menu key to see if it will let you abort the process. It might do that if the install hadn’t started. Then try it again

How to update your Apple TV - Apple Support

Get help

• If you can’t update your Apple TV, make sure that you’re connected to a Wi-Fi or Ethernet network.
• If the progress bar for the update appears stuck or paused, don’t unplug your Apple TV. Allow more time for the update to complete. If you've been waiting for more than an hour, contact Apple Support before you restart or unplug or Apple TV.
• If there is an issue during the update, you might see a message that asks you to Erase All Settings or Restart. Try the Restart option first. If you see the same message again, select Erase All Settings.
• If your Apple TV doesn't turn on after the update is complete, learn what to do. 
• For other issues, contact Apple Support.

You should probably call AppleCare, please find the number in your area by clicking AppleCare Contact Info