Abstract: An audio processor for converting a multi-channel audio input signal, such as a B-format sound field signal, into a set of audio output signals, such as a set of two or more audio output signals arranged for headphone reproduction or for playback over an array of loudspeakers. A filter bank splits each of the input channels into frequency bands. The input signal is decomposed into plane waves to determine one or two dominant sound source directions. The(se) are used to determine a set of virtual loudspeaker positions selected such that the dominant direction(s) coincide(s) with virtual loudspeaker positions. The input signal is decoded into virtual loudspeaker signals corresponding to each of the virtual loudspeaker positions, and the virtual loudspeaker signals are processed with transfer functions suitable to create the illusion of sound emanating from the directions of the virtual loudspeakers.