CAKE’s Ed Galton

Ed Galton, managing director and chief commercial officer at CAKE, talks to TV Kids about navigating the seemingly unending changes in the kids’ TV sector.

Across all genres, those outfits that built their businesses on taking finished product and selling it to broadcasters across the globe are having to evolve. In the kids’ space, U.K.-based CAKE has been driving new approaches to financing and monetizing productions, boarding projects early in order to help producers find the best homes for their shows.

TV KIDS: How is CAKE positioning itself in the market today?
GALTON: We’re acutely aware of the challenges in how shows are getting financed. We’ve positioned ourselves fairly well as both a distribution business and a production business. That means that we can drive both ends of the business. We can help put shows into production. For example, Mush-Mush & the Mushables and Total Drama are two shows where we contributed significantly in getting the finance together and putting the shows into production. We can benefit from being producers, but then we can also benefit from placing content on platforms—linear, digital, wherever—as and when the opportunity arises. While others may feel exposed, we feel very positive about where we are and our position in today’s marketplace.

TV KIDS: What are the primary funding models you’re using with your production partners?
GALTON: There are various ways to put the financing together on projects. One, working with production companies in tax-friendly territories, [such as] the U.K., Canada, Ireland, Australia. All of these places have some tax benefits. That’s a very good starting point. Two, do some presales, couple that with the tax-friendly territories, and then whatever gap is left over, you would either gap-finance in return for an equity position as a minimum guarantee or find a facility that is willing to gap-finance. We’ve done that in the past by working with EIS [Enterprise Investment Scheme] companies out of the U.K. that were willing to gap-finance a small portion, say 15 percent. Or through somebody’s private-equity position as well.

The model is shifting now. Some of the SVOD platforms are financing content and being aggressive in the marketplace. Netflix seems to be investing the most. You have Disney+, Apple, WarnerMedia coming up—whatever that is going to look like in the kids’ space—and you have Amazon dropping away. They are putting down large sums of money to finance shows. But in return, you’re getting less ownership and fewer rights. That is where the model has shifted to today. The market will settle down. There will have to be some sharing of rights and relaxation of some of the windows. I don’t think this phase we’re in now is going to last forever. Who wins in the time we’re in now? The IP holders—the people who are producing a certain level of high-quality content that these platforms want to be a part of—and known brands, because they have a built-in audience.

TV KIDS: How does Netflix’s desire for an exclusive global window impact your distribution strategies?
GALTON: Linear broadcasters are now reliant on on-demand activity to keep their relevance, especially in the kids’ space. We have lots of rights restrictions when we’re working with Netflix and some of the other platforms. That makes it much more complicated. Maybe there will be a settling of the marketplace when the growth of Netflix subscribers slows down in certain territories. In those territories, there might be a relaxation of the fears and anxieties about Netflix entering the marketplace. Right now, they are unwilling to share but hopefully, over time, that will relax. Window sharing has occurred forever in our business. With the emergence of the cable business, the free-TV broadcasters were sharing windows with the cable channels. There is still a massive demand for content, these channels still exist, the platforms still exist [and there will be a need to fill them with content] so I’m sure there has to be a give somewhere down the line. I’m hoping! It can be frustrating but it just alters how we operate.

TV KIDS: How do the SVODs stack up in promotion and marketing compared with the linear channels?
GALTON: Netflix is set up very differently from, say, Nickelodeon. Nickelodeon has an opportunity as an advertising-based network to promote and advertise on their own platforms and off-platform to drive traffic to a specific show. Netflix is more reliant on an algorithm, and they are confident the algorithm will succeed, and therefore, the right audience will find your show. The challenge in today’s marketplace, especially if you’re trying to build a brand, is how does [a show] succeed on platforms when it all goes live at the same time? If you have the opportunity to use and consume in one sitting, once you’re done, you move onto something else. Whereas if you’re Nickelodeon and you own SpongeBob SquarePants, you can put that on seven days a week, five times a day and keep on promoting. And you can do that for 15 years. That’s the challenge that hasn’t been resolved. Netflix and some of the other platforms might say otherwise. But these are smart people and they’re spending a lot of time figuring it out. I’m sure they will find a solution. These guys are investing heavily in this space. They want to figure out how to make money off-platform as well. If you’re investing in kids’ IP, that seems to be the golden nugget—that’s how you get your Peppa Pig and SpongeBob SquarePants. You need to live off-platform as well.

At the end of the day, kids want to engage with brands. The biggest compliment for any IP creation is not only do the kids want to engage while watching passively, but they want to interact with it, they want to buy the toy, wear the clothing, use the lunchbox.

TV KIDS: What projects are you working on now that you’re most excited to talk to your clients about at MIPCOM?
GALTON: We will be launching our brand-new series Mush-Mush & the Mushables at MIPCOM this year. Produced by La Cabane and Thuristar (My Knight and Me) in co-production with CAKE, original drawings are brought to life in this CGI comedy series following the Mushable community in forest adventures set to capture children’s imaginations everywhere. Mush-Mush & the Mushables is already set to air internationally on Boomerang, Canal+ Family (France), VRT-Ketnet and RTBF-OUFtivi (Belgium), RTS (Switzerland) and RTL Telekids (the Netherlands).

Based on a series of award-winning books, Treasure Trekkers follows three heroic mouse-sized adventurers as they protect the world’s treasures on a global journey in which they learn that the most precious treasures of friendship and kindness come from within.

In Kiri and Lou, the warm-hearted friendship between two dinosaurs is captured using stop-motion animation from Antony Elworthy (Coraline, Corpse Bride, Isle of Dogs) and was selected for screening at Annecy this year.

And finally, second seasons of our hit shows, including Fresh TV’s Total Dramarama, the hilarious prequel to the successful Total Drama franchise with original cast members aged down as toddlers in a daycare center; 26 new adventures from Olobob Top produced by Beakus where delightful characters continue themes of friendship and teamwork in a creative and vibrant world; and groundbreaking series Pablo from Paper Owl Films that celebrates autism through original stories written and voiced by young autistic talent.