The merchandising campaign for Bakshi’s The Lord of the Rings was extensive but poorly managed, as unfocused as promotion of the feature itself. The action figures were underproduced and I don’t remember seeing a single advertisement for them. Even if the line had been on the shelves in force, it would have been lost in the clamor for Star Wars, BSG, Micronauts, and giant robots.
Knickerbocker Toy Company, at the time “the world’s largest manufacturer of the popular Raggedy Ann and Raggedy Andy dolls,” was founded in 1922 and went out of business in 1982, “battered by losses.” The LOTR gambit didn’t help.
By the way, if you want to own one of these guys—or buy me one for Christmas—the specimens above went for between $300 and $600. You can see close-ups of all the figures here. The Ringwraith is pretty impressive.
UPDATE (4/5/14): I finally found a carded figure, Aragorn, with a price tag on it. $3.75 is way too high, even with the extra markup you’d expect at a drug store. The high end on the Galactica figures was about $1.99, and $2.99 was the high end for the Empire figures.
UPDATE (7/14/14): Adding another price tag for the same figure. Same store, much lower price, and it doesn’t look like a markdown sticker.