*sniff* I remember this. Disney was in the process of buying all the rights to the non-Sesame street Muppets when Jim Henson died. (Kermit is the only shared Muppet between the two groups.) Disney chose to go ahead with the purchase even without Henson.
"In my world you wouldn't say "meow", you would say "yes Ms. Alice". Oh, but you would! Why, in my world cats and rabbits would reside in fancy little houses, and they'd dress in shoes and hats and trousers, in a world of my own."