Over the years, about half of the plays I've written and gotten published are based on works by others, including Miracle on 34th Street, and works by Mark Twain, Steve Allen, Aesop, the Brothers Grimm, and the bible. Looking at the current selections of Broadway-type offerings based on existing works, there are Cats, Phantom of the Opera, The Scarlet Pimpernel, and a host of others.
Getting Permission
For works with copyrights before 1920, no permission is needed -- at least as far as the U.S. copyright laws are concerned. Nor is permission needed for works whose copyrights have expired. Such works, usually novels and poems, are freely available for adaptation.
My experience is that dealing with authors and agents is much easier than dealing with movie studios. So far, I have had to pay no up-front money toward any author or author's agent for adapting a book to the stage. Usually, it is a matter of working out a percentage of royalties, so everyone wins. I'd much rather have 80% of some royalties than 100% of nothing. I haven't yet had to deal with a movie studio, but I have the feeling that if I did, they may want up-front money.
My usual routine is that after deciding on a work to adapt, I write to the author in care of the publisher (unless I can somehow locate the author directly). This gets the ball rolling, and after finally making contact with the author or the author's agent, I can present my case. As with any other presentation, I try to make sure I present a compelling case for turning this work into a stage play, giving reasons why the stage play would be advantageous to the author (such as creating a new audience or giving a new interpretation).
Working the Play
When you are ready to start on an adaptation, first take inventory. How many characters are in the original work? How many scenes are there? What time frame does the work cover? How many different settings exist?
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