NEW YORK -- Nickelodeon boss Herb Scannell remembers his reaction to a rough cut of the very first "SpongeBob SquarePants" cartoon.

SpongeBob -- a bright-eyed, knickers-clad, sea-dwelling kitchen sponge -- had realized his lifelong dream: He got hired as a fry cook at the Krusty Krab diner, where, right away, he proved his worth by single-handedly serving an invasion of ravenous anchovies.

But here's the kooky part: The sequence showing SpongeBob work his magic at the grill is accompanied by a 30-year-old recording of Tiny Tim warbling "Livin' in the sunlight, lovin' in the moonlight, havin' a wonderful time!"

"When I heard that," says Scannell, enjoying the memory, "I thought, 'This show is gonna go places we don't really expect.'"

And how. Premiering weekends on Nickelodeon in July 1999, "SpongeBob" won a weeknight berth two years later, and, soon after that, its benthonic hero was the biggest star in childrens TV.

"SpongeBob SquarePants" recently completed a year as the top-rated show on broadcast or cable among youngsters 2 to 11.

It routinely claims several of the top 15 weekly cable-ratings slots and soaks up 61.5 million viewers per month, one-third of whom -- reflecting its unexpectedly broad appeal -- are adults 18 to 49. (It airs Monday through Friday at 8:30 a.m., 5 to 6 p.m., and 8 p.m., as well as Saturday and Sunday from 9 to 10 a.m.)

Merchandise mania

Another gauge of SpongeBob's popularity is merchandising, which this year is expected to reach $600 million in retail sales. Nearly 100 companies are marketing SpongeBob fare that includes skateboards, beach towels and paper towels, backpacks and mac-and-cheese. Not to mention Halloween costumes: Look out soon for legions of SpongeBob trick-or-treaters.

One outlet for SpongeBob paraphernalia is Roger & Dave, a novelty shop in downtown Manhattan. Co-owner Roger Roth says the SpongeBob line is a top-seller among a clientele split evenly between gay and straight.

"The gay community likes the freedom SpongeBob shows. He's open and upbeat," Roth says. "But it's not just a gay thing. It's gay and straight."

In August, the Parents Television Council rated "SpongeBob" third-best among prime-time shows from a family-values perspective, noting the show's appeal "spans generations."

Meanwhile, SpongeBob is headed to the big screen. After producing 65 half-hours for television, creator Stephen Hillenburg has begun writing a "SpongeBob" movie, scheduled to reach theaters in 2004.

While acknowledging that "when you set out to do a show about a sponge, you can't anticipate this kind of craze," Hillenburg is willing to offer a theory for its success: "Spongebob is an innocent, and people respond to an innocent. I don't think it matters if you're young or old."

"SpongeBob is childlike but not childish, a sort of boy-man like Jerry Lewis or Stan Laurel," adds Tom Kenny, who supplies SpongeBob's eager, braying voice he describes as "the Mayor of Munchkinland meets Elroy Jetson."

Simpler to explain is the setting for "SpongeBob." Hillenburg is a marine biologist-turned-animator.

But why, of all marine fauna, did he choose as his protagonist a sponge -- and a synthetic, manufactured-looking sponge, at that?

"Even among an odd group of characters," Hillenburg reasons, "I thought that would automatically make him the oddest."

Twisted logic

But it's tough competition in the seabed community of Bikini Bottom. There SpongeBob hangs out with his best friend Patrick, a dim-witted starfish; his sweetie, Sandy Cheeks, a squirrel who gets around in a diving suit; his cranky, clarinet-playing neighbor, Squidward; and his tight-fisted, er, -clawed employer, Mr. Krabs.

Together they enjoy a certain twisted cartoon logic that allows them, even in their watery world, to converse, sleep on linens with a pillow, sunbathe, fly kites, and, of course, fry up those delicious Krabby Patties.

A boisterous free spirit, SpongeBob exudes a happy-go-lucky attitude that "usually wins out," says Hillenburg -- "or at least gets him into some interesting predicaments."

For now, perhaps for good, production on the "SpongeBob" TV series has wrapped as Hillenburg turns his attention to the feature film.

"This is what Steve wanted to do: work on one thing at a time," Scannell says.

Fortunately, Nickelodeon has stockpiled 15 unaired episodes to ration out before the film's release. And Scannell looks forward to "SpongeBob SquarePants" going international with its goofy goodwill: overseas TV sales are just beginning.

"It could be a kinder, gentler world," Scannell says, "if SpongeBob became a global icon."