I used to wonder this about teletubbies when DS1 was a baby, it capture him and he giggled when the baby came on, he was just over a year old at the time and we discovered it by accident one morning when he was awake and we didn't want to get up.
I took my son to the live show for his 2nd birthday. I wasn't sure whether he'd be able to sit quietly through an hour long show. He was entranced! You must be right - it's some kind of demon headmaster-esque witchcraft.