BABELSBERG, Germany -- In the dusky movie studios on this sprawling lot, Marlene Dietrich once rose like an apparition out of cigarette smoke to become "The Blue Angel." On these same grounds, just southwest of Berlin, director Fritz Lang conjured up the futuristic shimmer of "Metropolis."
But that all happened more than 60 years ago -- before Hitler, the Soviet army and more than four decades of Communist rule marched this old studio to the brink of oblivion. Now hopes for revival rest partly on such characters as the Luck Dragon, a fuzzy, glorified Muppet. Or Bark Troll, a talking tree who whines a lot.
Not the stuff of film classics, perhaps, but it's a start. And in the shaky European film industry, where lately more energy is spent railing against U.S. "cultural imperialism" than on making movies, the stirrings of resurrection at Babelsberg offer hope of renewed glory.
"I think this studio really could be a great advantage to the film industry in Europe," says Oscar-winning special effects director Derek Meddings, who's helping bring to life the Luck Dragon and Bark Troll during the filming of the children's film, "The Never Ending Story III."
"I guess the only studios you can say have a future for sure are in America," he adds with a sigh. "But I hope this studio has got a future, because if they take big ones like this one down, there won't be anywhere in Europe to make big movies."
A few years ago it looked like Studio Babelsberg and all its tradition might not survive the pains of German reunification. Its 700 employees had plugged away mostly at low-budget films during the inflexibility of the Communist years, and they were saddled with dilapidated equipment and crumbling old buildings.
They seemed destined to end up alongside the hundreds of thousands of East German miners, assembly-line drones and other workers shoved into unemployment during the furious push to modernize, consolidate and rebuild the East.
But in December two business conglomerates, Compagnie Immobiliere Phenix (CIP) of France and Chelsfield Properties of England, bought Studio Babelsberg and pledged to spend more than $250 million sprucing up the place.
The companies also plan to invest millions more during the next seven years building a "Media City" that would include shops, hotels, theaters, offices, apartments and a film school. The hope is that Babelsberg and its 100-acre site will become the centerpiece of a European Hollywood.
Helping lead the studio's march back to respectability is managing director Volker Schloendorff, who directed the 1979 Academy Award winning German film, "The Tin Drum."
Mr. Schloendorff admits it won't be easy.
"We are trying to maintain the tradition here against all economic reason," he says. "The positive side is the tradition of craftsmanship." The relatively low wages at Babelsberg don't hurt, either, he says.
Then there are the negatives, he says -- "60 years of state production, with no commercial flexibility . . . At the moment, creativity is at a standstill in Berlin. But the planned economy is over. We are free and flexible. If films are being made in Europe, we survive."
Strolling around the studio, one sees how the rejoining of East and West Germany can produce a rough mix even on a movie set. On the "Howling Forest" set of "The Never Ending Story III," builders assembled the frames of giant man-made trees by hammering together a chaotic crisscross of boards and wooden poles.
Mr. Meddings, the special effects director, was used to the more orderly Hollywood technique of frame-building with tubular steel, and he was fairly appalled.
"You look at it and say, 'I don't think that will work.' You're terrified," he says.
He also wasn't reassured by his first tour of the place.
"I was doubtful, because you walk around and all they show you is big empty stages."
But he's been won over, and is even convinced now that those trees are all safe, despite their unorthodox construction.
"I think it's a good studio," he says. "They're hard workers here, and they've got a good sense of humor, which is very important in this business."