Scrooge learns the errors of his ways and on Christmas morning, he spends his money for the benefit of the townsfolk and joins the Cratchit family for Christmas dinner (and Tiny Tim doesn't die).
The movie opens on Gonzo as Charles Dickens, telling the story of Ebenezer Scrooge (Michael Caine). Dickens and his buddy Rizzo the Rat follow Scrooge and narrate the story. Rizzo is often more interested in finding food throughout the film, and both are often comically knocked down from great heights as the story progresses.
On Christmas Eve, Scrooge is hard at work at his business. He keeps his bookkeepers working in the cold, ignores his jolly nephew Fred (Steven Mackintosh), refuses to donate to the poor (fundraisers played by Dr. Honeydew and Beaker), and is dismissive of his head employee Bob Cratchit (Kermit the Frog). Mostly, he hates the Christmas season. Bob and the bookkeepers manage to convince Scrooge to give them Christmas day off, but only because they point out that no other business would be open that day to do business with.
When Scrooge goes home alone, he meets the ghosts of his former business partners, Jacob and Robert Marley (Statler and Waldorf). They are long-dead and are now ghosts covered in chains. They note that they built their ghostly chains through their misdeeds in life and that Scrooge is well on his way to ending up like them. They say that Scrooge will be visited by three ghosts before the night is done.
At midnight, the Ghost of Christmas Past visits. She takes Scrooge (as well as Dickens and Rizzo) to re-visit his youth. He initially revels in seeing his old school-friends and classroom, until he remembers that he spent most of his time on his own, studying. Young Scrooge is encouraged by his Professor (Sam the Eagle) to set aside his personal life to focus on his pursuit of business success. They then jump ahead to where Scrooge works for his first boss, a man named Fozziewig (Fozzie the Bear). Fozziewig is holding a raucous Christmas party (with music provided by Rowlf the dog as well as Dr. Teeth and the Electric Mayhem). Scrooge is hard at work, but happens to be introduced to a woman named Belle . He and Belle immediately fall in love. Despite Scrooge's protests, they then journey to one other prior Christmas where Belle breaks up with Scrooge due to his unwillingness to give up his business prospects to marry her. Scrooge is in tears over this memory as they return home.
Next, Scrooge is visited by the jolly Ghost of Christmas Present, who lifts Scrooge's spirits. They go off to observe invisibly how others are spending Christmas. They first visit Fred's house, where they observe he and his fiancee mock Scrooge's boorish Christmas behavior, noting this is a time for good will and love. They then observe Bob Cratchit and his wife Emily (Miss Piggy) and their many children. Emily clearly dislikes Scrooge, though Bob notes that it is through Scrooge's employment that they can afford a Christmas dinner. One of their sons, Tiny Tim, asks specifically for god to bless Scrooge and the whole family breaks out in song asking god to bless everyone. Scrooge is touched by Tiny Tim's selflessness, especially in light of the fact that Tiny Tim is both sick and lame.
Finally, Scrooge is visited by the Ghost of Christmas Yet to Come. They walk through the streets in the future to find the townsfolk to be rejoicing over the death of a very disliked but wealthy old man. They also stop by the Cratchit household where the family mourns over the death of Tiny Tim. Scrooge also cries at the sad scene. The ghost takes Scrooge to the cemetery to see the grave of the disliked and now-forgotten old man. Scrooge is sorrowful to discover that the headstone reads "Ebenezer Scrooge." He weeps and asks the ghost whether the future might be changed. The ghost does not answer.
Suddenly, Scrooge wakes up in his bed and finds that it is now Christmas morning. Having had a total change of heart, he buys food for the poor, makes a big donation to charity, visits Fred and lavishes him with gifts, and sings a song about how true wealth is found in friendship and love. He then stops by Bob's house and initially puts on his curmudgeonly facade (to the point of being accosted by Emily, who has had it with Scrooge's behavior). Scrooge then drops the act and gives Bob a raise and provides a lavish Christmas dinner for them. He also pays off their mortgage and becomes a mentor and second father to Tiny Tim (who Dickens notes, does not end up dying thanks to Scrooge's beneficence). It is a happy ending for all, although Gonzo ends the film by advising the viewers to "read the book."
Thanks Evan B!