Randolph Smiley (Robin Williams) is the host of "The Rainbow Randolph Show", a popular children's television series broadcast on the fictional network Kidnet. Despite his friendly appearance on-stage, off-stage he is a corrupt and alcoholic businessman who secretly accepts bribes from parents who want to put their kids on his show. After an FBI sting exposes him, Randolph is fired and his show is cancelled. He is also kicked out of his corporate penthouse and loses all of his money, leaving him homeless, unemployed, and broke. Kidnet replaces Randolph with the "squeaky clean" Sheldon Mopes (Edward Norton) and his character, Smoochy the Rhino. Mopes is uniquely sincere and thoroughly interested in providing quality child entertainment, and despite doubts from his hardened producer Nora Wells (Catherine Keener), his show quickly becomes tremendously popular. Meanwhile, Randolph turns to his former associate Marion "Frank" Stokes (Jon Stewart) and pleads to help him get his job back, but Stokes refuses, saying that he can't even be seen talking to Randolph. Randolph then turns to his former partner Angelo Pike (Danny Woodburn) and asks him to stay at his apartment, to which Angelo reluctantly agrees.
Mopes quickly finds himself losing creative control over his show to Nora and with the help of his new agent Burke Bennett (Danny DeVito), Mopes renegotiates his contract and is named executive producer. Irish mob boss Tommy Cotter (Pam Ferris) approaches Mopes and asks him to create a spot on his show for her cousin Spinner Dunn (Michael Rispoli), a former boxer whose numerous head injuries have left him with brain damage. Mopes reluctantly adds Spinner to the show, first as a cowbell-wielding game warden, and later on as Smoochy's cousin Moochy.
Mopes is horrified to learn that Burke has signed him up to star in a Smoochy ice show, as he fears that the event will exploit children. Burke and Merv Green (Harvey Fierstein), the head of the corrupt charity running the ice show, warn Mopes not to back out of the event but he does so anyway. Soon afterward, a disguised Randolph tricks Mopes into performing a Smoochy act at a neo-Nazi rally that is raided by the police. Mopes is branded a racist and loses his job and show. However, when Randolph barges into Nora's apartment and tries to convince her to help him get his job back, he accidentally reveals that he set Mopes up. Tommy and her crew then barge into Angelo's apartment and force Randolph to confess that he tricked Sheldon before beating him up and turning him over to the police. As a result, Smoochy's reputation and show are restored and Randolph is dubbed the most hated man in America by the media. To make matters worse, Angelo kicks Randolph out of his apartment after he smashes his TV in a fit of rage. After telling him that his show is back on the air, Nora kisses Mopes and has sex with him, starting a relationship.
Mopes then decides to perform in an ice show, but rather than involve the corrupt charities, he decides that half the proceeds of the ice show should go to the drug rehabilitation clinic where he used to work while the other half to child literacy enhancement programs. Also, the children who attend the show will be given free souvenirs and healthy snacks. Burke and Green retaliate by plotting to kill Mopes and hire a new host who will cooperate with their profit skimming. However, their plan backfires when during a rehearsal, Green's men mistake Spinner in his Moochy costume for Mopes and murder him. When Tommy and her men get word of his death, they retaliate by killing Green and his men. Meanwhile, Randolph corners Mopes and Nora in their penthouse and threatens to kill them. Randolph reveals to Sheldon that Nora has had affairs with numerous children's show hosts, including Randolph himself. Sheldon is hurt by this, but Nora insists that she has genuine feelings for him. They manage to talk Randolph down and discover that he is depressed and genuinely misses entertaining children. Randolph has a change of heart and an empathetic Sheldon offers to let him stay in the penthouse until he recovers.
Burke and Stokes decide to partner up after hearing of Green's death. They hire Buggy Ding Dong (Vincent Schiavelli), another former kid show host who became a heroin addict, to assassinate Mopes during his ice show. Buggy steals a backstage pass to get inside, but before he can shoot Mopes he is confronted by Randolph. They struggle for the sniper rifle until Buggy falls to his death in the ice rink. After Mopes realizes that Burke and Stokes set him up, he chases Burke into an alley. Mopes pulls a gun and threatens to kill Burke, but Tommy and her men arrive and persuade him not to forfeit his high ideals. Tommy decides to take care of Burke and Stokes in her own way, Mopes and Nora share a kiss in Times Square and the movie ends with Smoochy and Randolph launching a new show together.
Output: What favor did Randolph ask of Angelo after losing his job and home?