How Conde Nast Plans to Turn John McAfee’s Bizarre Tale Into Hollywood Gold

This story first appeared in the April 26 issue of The Hollywood Reporter magazine.

Last May, journalist Joshua Davis embarked on a trip to Belize to interview eccentric software entrepreneur John McAfee for Wired magazine. Six months later, when local police revealed they were seeking to question McAfee in connection with the murder of his neighbor, Davis was still in touch with the now-wanted man. And Wired owner Conde Nast found itself sitting on one of the most sought-after stories of the year.

“This is exactly why we were created,” says Conde Nast Entertainment Group president Dawn Ostroff. “Josh’s McAfee story is pretty indicative of our potential.”

When Ostroff took the reins of the new division 18 months ago, she envisioned a bold expansion of the traditional role of a magazine publisher that would supplement declining print revenue with film, TV and digital projects. So far, the results have been mixed but promising.

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Ostroff has an official development slate of just three films and no TV projects to show for its efforts in Hollywood. In the process, the group has angered some writers and agents thanks to a boilerplate freelance contract that calls for a 12-month right to option articles, profiles, essays and short stories. Sources say New York Times best-selling authors and those whose work already has been produced for TV and movies have been able to negotiate an exemption to the rule.

Still, with a trove of some 60,000 articles from 18 publications includingVanity Fair, The New Yorker and Vogue at her disposal, the former CW Entertainment chief finds herself in an enviable position as intellectual property has become more important than ever.  Tightening writer contracts helps prevent a situation like with this year’s Oscar best picture winner Argo, which stemmed from a 2007 Wired article by Joshuah Bearman and grossed $230 million worldwide but provided no financial benefit to the company.

Ostroff isn’t alone in wanting to change that. Her moves come at a time when publishing companies are desperate for new ancillary revenue as the print cash cow dies. Later this month, NBCUniversal will launch an Esquire cable network in a licensing deal with Hearst that aims to entice Madison Avenue buyers. Publishing sources say that all of the rival magazine groups are watching Conde Nast’s contract moves closely to see if they are successful and can be replicated.

The McAfee story serves as a blueprint. Long before the ex-pat exec became entangled in a possible murder, CNEG executive vp Jeremy Steckler thought he would make for a powerful story. Steckler, in consultation with Wired editors, asked Davis if he wanted to arrange a trip to McAfee’s jungle compound. Los Angeles-based Steckler, a former film executive at Imagine and Fox Searchlight, saw the story as the basis for a potential film. “The whole thing was pretty much reverse-engineered by Jeremy, who thought McAfee might be interesting,” Ostroff notes.

When McAfee proved to be more than just an unhinged millionaire, Warner Bros. scooped up the CNEG-controlled property and set Crazy Stupid Love filmmakers John Requa and Glenn Ficarra to write, direct and produce. If the movie gets made, the publisher stands to score a big fee and retain a share of profits.

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To that end, Ostroff has been dipping into the Conde Nast archives. She and Steckler dusted off Robert Draper’s 2002 GQ article “The Horse Whisperer” (unrelated to the 1998 Robert Redford movie of the same name), about a Kentucky prison inmate turned horse rehab specialist who found redemption by nursing the offspring of Triple Crown winner Affirmed. And they are developing The Camorra Never Sleeps, an Italy-based crime story based on a 2012 Vanity Fair article by William Langewiesche. Neither Horse Whisperer nor Camorra Never Sleeps is set up at a studio, but Steckler insists that a number of deals are in the works. Furthermore, he says Hollywood is eager to utilize CNEG’s ability to quickly fill a specific need because of the way its archives have been coded.

“Studios are picking up the phone and calling me and saying, ‘We’re looking for X and Y and Z,’ ” Steckler explains. “One studio specifically wanted an adult relationship comedy. We found [the basis for] one from our archives from 2008. We hooked up with a piece of talent, cultivated a take and now we’re in negotiations.”

As a result, the new group has put money in journalists’ pockets to option material sitting on the shelf, including 20 additional film projects and 10 TV projects (though CNEG declined to name them). But the team still struggles to endear itself with the writing community. Its new boilerplate contract has drawn the ire of the Authors Guild, which called it a rights grab. “The publisher is compensating the freelancer for his or her journalism, not for speculative movie and TV deals,” the guild said. And while top writers enjoy the leverage to bypass the boilerplate contract, more than 1,100 writers have acquiesced and signed the contract since Conde Nast began to quietly roll it out last summer.

Top book agents are equally aghast by Conde Nast’s move. “They are a fantastic business partner of ours, but they do not have an established expertise in the creation of feature films or TV,” says ICM Partners’ Sloan Harris, adding that the contract prevents agents from discovering what the market will bear for rights. Furthermore, Conde Nast isn’t necessarily the best partner to adapt a client’s work.

“If they’re the best partner and they can prove that, we would sell to them every time,” he says. “But they can’t just be the one simply because they originated the magazine piece.”

Agents at other major agencies, including CAA, which reps CNEG, declined to weigh in on the record. But other high-powered agents echoed Harris’ sentiment.

“It makes me want to choke into my latte when I hear them frame this as author-friendly,” says a top lit agent who has steered clients away from placing articles in the group’s fold. “This is completely unprecedented in the publishing industry. The dramatic rights deal is the only chance a journalist has to hit the jackpot, and they’ve taken that away.”

But Ostroff counters that the Conde Nast contract represents a win-win for writers because her group is able to draw from a pool of money to develop projects that didn’t exist before.

“Most of these articles would sit fallow,” she insists. “If you look at the overall total number of projects that we [will be] optioning to develop, it by far exceeds any amount that has ever been optioned before from any outside producers because that’s primarily what we’re here to do.”

Still, it remains unclear if a project like Argo would have blossomed into an Oscar-winning best picture if it had been developed in-house at CNEG rather than with A-list producers George Clooney and Grant Heslov. Ditto for Elizabeth Gilbert’s 2003 Allure essay “The Road to Rapture,” which evolved into the Julia Roberts starrer Eat Pray Love thanks to the nurturing of Brad Pitt’s Plan B.

But Ostroff, who also served as president of UPN from 2002 to 2006, is adept at developing commercially viable material. During her CW tenure, she launched hits including Gossip Girl and The Vampire Diaries. At UPN, she championed Tyra Banks’ America’s Next Top Model.

Now, as the gatekeeper for some of the most iconic magazine brands that reach some 200 million readers globally, Ostroff has assembled a team of executives with showbiz roots. In addition to Steckler, Sundance Channel alum Michael Klein is overseeing the group’s reality TV efforts, and Fred Santarpia, the one-time GM of music video website Vevo, is leading the group’s push into digital.

In March, the company unveiled a new digital video network with slates of original video series built around the Glamour and GQ brands. Among the new series is Glamour’s Elevator Makeover and GQ’s The Ten, which features guest spots by Andy Cohen and Anthony Bourdain. Though notably absent from CNEG’s debut lineup is any digital content from Vanity Fair, Vogue or The New Yorker.

“The idea is to launch eight to 10 of these [magazine brands as] channels in 2013, and I think a lot of it will be determined by the success we see with these first two channels,” says Santarpia, who joined the group 10 months ago. “The order just hasn’t been totally settled on yet.”

Ostroff, who spends much of her time meeting with editors such as Anna Wintour and Graydon Carter to look for ways to translate print to the screen, wouldn’t reveal what kind of investment Conde Nast is making in its digital operations other than characterizing it as a start-up. When the magazine channels are all up and running, Ostroff expects to create 4,000 webisodes per year.

Ultimately, she wants the ability to adapt magazine content seamlessly for additional platforms, be it film, TV or digital. The goal, she says, is to maximize the reach of the brands.

“In the future, the platforms are all going to blur,” Ostroff says. “It’s not going to be television or digital. It’s going to all just be content. And they won’t know the difference between something that comes from Netflix or Amazon or NBC or CBS or History or Conde Nast. To consumers, it’s all just going to be content.”

Email: Tatiana.Siegel@THR.com, Twitter: @TatianaSiegel27