It carries audio. If I remember, in up to 6 formats. You may want to check that the sending box and the receiving box are using the same format. Especially if you're sending, say, Dolby TrueHD and whatever the DTS equivalent is called: they're only supported by version 1.3.
Check what your HD DVD player is set to output. HD-DVD standard covers 6 or 7 mandatory audio formats, one of which is incompatible with TV sets below HDMI 1.3.
E&OE, I'm going from memory.