Special Date: December 3, 1978
Aired on PBS
The opening features the inhabitants of Sesame Street enjoying an ice skating party. Big Bird has trouble skating, but a child gives him a hand, and he ends up skating very well. Bert falls victim to the antics of Ernie, Cookie Monster and Count von Count as they play ice hockey with one of his shoes, clown around while barrel jumping (the Count counts the barrels, Ernie cheats by lifting his left foot over them, and Cookie tries to jump only to land on and destroy them), play a practical joke on him, and make him very dizzy in a game of Crack the Whip. After the skating party, the characters head home to Sesame Street performing the song "True Blue Miracle." Then, the story diverges into three principal plotlines.
In the main plot, Oscar the Grouch tells Big Bird and his friend Patty (a girl around age seven) that there will be no Christmas presents if Santa Claus is unable to go down narrow chimneys. Distraught, once they return to Sesame Street, Big Bird and Patty enlist the help of Kermit andGrover to ask children how Santa does it. Their responses vary. Big Bird even tries to experiment by having Mr. Snuffleupagus play Santa Claus entering a pretend chimney, but still does not find the answer. Patty tries to comfort him, but fails. He winds up trying to stay up all night on the brownstone's roof, watching for Santa Claus, but falls asleep while the residents of Sesame Street become very worried looking for him. During the search, Maria confronts Oscar for upsetting Big Bird. He says he was only teasing Big Bird and agrees to search for him. Back on the roof, at one point, sleighbells and hoofbeats are heard, and a person's shadow falls over the dozing Big Bird. He is startled awake, but sees nothing unusual.
Meanwhile, Bert and Ernie want to give each other Christmas presents, but have no money. Bert trades away his prized paper clip collection to buy a pink soap dish for Ernie's Rubber Duckie, but Ernie has bartered Rubber Duckie to get Bert an empty cigar box for the paper clips. Mr. Hooper, the store owner, realizes what is happening by the look on their faces. That night Ernie and Bert give their gifts to each other, but they don't want to admit to each other how they traded their possessions. Just before they can confess to each other, Mr. Hooper arrives and gives both characters their treasured possessions back as presents while also reminding the audience that although, being Jewish, he does not celebrate Christmas, he still understands the spirit of the holidays. This story is a retelling of the O. Henry story "The Gift of the Magi".
While all this is going on, Cookie Monster tries to write a letter to Santa Claus and request cookies for Christmas. However, as he talks to himself about the many different kinds of cookies he would like to get or what he might get, he gets hungrier and hungrier, and ends up absentmindedly devouring the instruments he is trying to use: the pencil, his finished letter with the typewriter, and a telephone in turn. With the phone ringing inside his belly, he finally catches on to the problem. AtGordon and Susan Robinson's apartment, he laments that he was unable to contact Santa. Gordon reminds him that he might get what he wants - if he leaves a plate of cookies for Santa, leaving Cookie Monster to look devastatingly at the audience.
At the end of the special, when Big Bird comes down from the roof to warm up, Gordon and Susan make sure he stays. They comfort him by showing that there were indeed presents brought, but having Big Bird back for Christmas is more important. When Big Bird expresses dismay that he did not figure out how Santa got down the chimney, Gordon responds, "Do you remember what Oscar told you?" Big Bird recalls that Oscar told him that, if Santa couldn't get down the chimney, no one would get any presents. Gordon asks Big Bird, "Well, look around you, Big Bird. Does it look like no one's getting any presents?" Big Bird looks at the pile of presents under the tree and sputters, "But it's a miracle!" Big Bird again expresses concern that he does not know how Santa made it down the chimney. Gordon queries Big Bird, "Well, why do you want to know, Big Bird?" Big Bird answers, "It's important." To that, Gordon says, "No Big Bird, that's not what's important. What's important is, we lost you tonight. And we were all very worried about you. But now you're here . . . and we're all together for Christmas . . . " He finishes by singing a line from the earlier-performed song, "True Blue Miracle:" " . . . and if that isn't a true blue miracle, I don't know what one is."
At that moment, Oscar stops by, "I hear the turkey's back." Susan invites him to come in, and Oscar tells Big Bird, "Hey, listen, you big canary, I'm glad you're back...'cause I want to ask you a question...how do you think the Easter Bunny can hide all those eggs in one night? " Everyone groans and says, together, "OSCAR!!" Big Bird looks at the audience with a familiar worried expression...
Then, Big Bird and Patty head outside to Sesame Street itself, where someone has set up a large Christmas tree. Big Bird's friends are thrilled to see that he has been found. The special concludes with Susan and Gordon returning to their apartment to find that Cookie Monster has eaten the needles off their Christmas tree. "Scotch Pine delicious, but Douglas Fir give me heartburn!" he laments. Some of the closing funding credits are displayed on a black screen with Cookie Monster's numerous belches heard on the soundtrack.