In 1990, not all long after the original animated film arrived in theatres and was a tremendous smash, Jim Henson had the idea of creating a half-hour television musical spin-off based on the film. His idea involved a combination of live-action and puppetry, and would follow Ariel and her friends' adventures at her island, i.e. Little Mermaid's Island.
They only managed to film two episodes before the project came to a screeching halt with Jim Henson's death. Production complications lead to those episodes never being aired, and the project as a whole scrapped. However, the incomplete episodes managed to survive in the hands of a few, which is why the show hasn't been completely forgotten over time.
Ariel was played by Marietta DePrima, with voice actors Samuel E. Wright and Buddy Hackett reprising their roles as Sebastian and Scuttle respectively. Also included in the character roster was Flounder (voiced by Veronica Taylor), Grimsby (played by Clive Revill) and new introductions Scales the dragon (Michael Thompson) and Flounder's twin sister Sandy.
The new characters of Scales and Sandy, plus the concept of a little mermaid's island overall, are similar enough to the stories of the 1992 Grolier Treasure Chest series of books, which has me thinking that the books were meant to be a companion to, or were inspired by, the TV series.
It's bittersweet to think what might have been if Little Mermaid's Island took off. There's certainly nothing quite like it even now, and would the animated TV series have not happened at all, or would the two shows have been aired side-by-side? Who knows.
The two videos below were uploaded by visitor Bruno, who also reminded me to make this page, thanks!