It is one of the most famous radio broadcasts of all time and turned its 23-year-old narrator-director, Orson Welles, into a household name. Welles was both celebrated as a genius and vilified as a prankster when his innovative dramatisation of HG Wells’s science fiction classic The War of the Worlds aired in 1938. The story was told through a series of news bulletins, interrupting a music programme, giving breathless reports about a Martian army invading the US. Listeners who tuned in midway believed it all to be true.

Or did they? A new theatre production from the British company Rhum and Clay will explore that notion of fear sweeping across America, and draw parallels between the climate of heightened fear in 1938 and the febrile run-up to the 2016 US presidential election.

Director Steven Spielberg with Dakota Fanning and Tom Cruise on the set of War of the Worlds (2005). Photograph: Paramount/Everett/Rex Features

In the novel, published in 1898, the Martians land in Woking, Surrey. Welles’s broadcast relocated the meteorite landing to Grover’s Mill, New Jersey. For research, Julian Spooner, Rhum and Clay’s co-founder, visited the town, which has a cafe dedicated to the broadcast and a monument claiming that in 1938 up to 1 million people believed the Martian invasion was real. “There’s quite a famous water tower there that still exists,” says Spooner. “The mythology around it is that an old man mistook it for a Martian on the night of the broadcast – like it was a kind of HG Wells tripod – and that he supposedly shot at it.” The company were intrigued by the many myths around what had happened – how a case of fake news left further fake news in its wake.

The theatre show will combine the story of the original broadcast with a plot about a modern-day female podcaster who, says Spooner, is trying to find out the truth of a family secret that dates back to the night of the Orson Welles broadcast in 1938. In doing so, it will switch between a world where the president of the United States can send personal tweets direct to millions, and an era when Americans began to listen live to momentous news events. Spooner says that, by 1938, the US audience had been “primed to react hysterically. A year before, they’d heard radio reports on the Hindenburg disaster.”

The two eras may be worlds apart technologically, but Rhum and Clay were interested by a common theme – “this idea of world events coming into your home and disrupting your comfort”. Matthew Wells, who co-runs Rhum and Clay with Spooner, says they also researched how radio was seen as a threat to print media: “A lot of the hysteria was generated by the print media to discredit the radio.”

Prog-rock spectacular … Jeff Wayne’s The War of the Worlds. Photograph: Jeff Wayne/PA

The War of the Worlds will have a cast of four, including Spooner, and has been devised by the company with the writer Isley Lynn, who had a cult hit with her play Skin a Cat. Lynn has dual British and American citizenship and the play looks at the similarities and the relationship between the two countries, with the podcaster travelling from the UK to the US. “I had a lot of success with Skin a Cat, which is a play about women and vaginas – and men, but through a female lens,” says Lynn. “And the boys in Rhum and Clay said, ‘Isley, well done on your vagina play. Do you want to do some science fiction with us?’ And for that I am forever in their debt. Everyone else was asking if I had more vagina plays.”

As well as merging the worlds of Wells and Welles, the show will feature references to Steven Spielberg’s 2005 film adaptation and Jeff Wayne’s prog-rock orchestral version, which became a long-running stadium spectacular and now features a 3D hologram of Liam Neeson. The show’s meta approach, says Spooner, reflects how “the world we live in now is such a pop-culture self-referential world. Everything is eating itself. This is a world in which the guy who used to be on The Apprentice is now the president.”

• The War of the Worlds is at the New Diorama theatre, London, from 8 January to 9 February.