Tread Merrily concludes with a return trip to Baywatch for the two-part Christmas episode, "Silent Night, Baywatch Night."

When Matt expresses his disdain for Christmas, a number of little people camp out by his tower. He comes to believe they are Santa's elves. Meanwhile, Mitch wants to celebrate a very special Christmas with his new girlfriend Tracy, who also happens to be his employee. CJ's beauty seemingly causes a priest to reconsider his devotion to the Lord. Hobie meets another street urchin with a compulsion for grifting. Will they die when a goon lures them out to the pier?

Sarah Madden returns for a slice of holiday cheer. She also learns about Man Power Pills and John Allen Nelson. Justin finds himself missing the acting talents of Billy Warlock. The group begins to identify Friends characters as their Odyssey counterparts. Sarah points out Christmas week weather in Los Angeles rarely allows for bikinis. David Charvet gets turned into an elusive hitman and Showtime is unveiled as the home of the nostalgic wank. Well, at least in the 1990s. Professional film and television goon Rhino Michaels gets dubbed "Slow Renegade." David Hasselhoff becomes the fourth Doctor What and Justin completely fails to make a joke land.