On 24th February 2015, DWO posted an update on the status of The Underwater Menace DVD (originally due for release in 2014, and rescheduled for 2015). The update confirmed that the title had been removed from the 2015 schedules "for the time being".
There was hope that the title might be released, especially as special features, commentaries and sleeve art (pictured-right)* had already been produced for the title. Fans even clubbed together and started an online petition, which attracted over 2,700 supporters and was submitted to the BBC. Sadly, according to the latest issue of Doctor Who Magazine (#488), it appears the title has now been officially cancelled.
Part of the reason is believed to be due to the insolvency at animation company Qurios, who would have animated the two remaining missing episodes [1 & 4]. Episode 2 was found in December 2011, and heralded the decision to release the adventure on DVD.
[UPDATE: It is now understood that the company involved in the animation was Planet55]
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[Sources: BBC Consumer Products; Doctor Who Magazine]
* Image from Issue 488 of Doctor Who Magazine