ASTA Theater begins its seventh year with a new home and two stages on Capitol Hill, 507 8th St. SE, once the Capitol Hill movie house. The attraction is fitting for the old spot, "Merton of the Movies," which George S. Kaufman and Marc Connnelly adapted in 1922 from a popular novel by humorist Harry Leon Wilson.

Coming from awkward, minute headquarters on 12th Street NW, the new ASTA home seems positively luxurious, with 140 seats in its larger hall and 80 in the second, which is to be opened later in the season. Now, the neighborhood, not far from Metro's Eastern Market station, will have a theater of its own, a companion to the Folger's small but spectacular home not far away.

Though the seats aren't new nor the stage spacious, the 8th Street spot should attract the participants and audience that artistic director Dona Cooper's plans envision.

The Kauffman-Connelly play, highly popular in its day was one of the first to satirize Hollywood. It's uncanny how accurately they and WIlson saw the types others later also would mock.

Merton is the simple, ingenuous fellow Kauffman and Hart would use as their playwright in "Light Up the Sky." An idealistic believer in what he's read of the movies, silent-style, Merton arrives at the casting office of Holden Studio, Hollywood. There are the officious receptionist Kauffman and Hart would use in "Once in a Lifetime," the maniacal director, the looney hangers on.

The vitality of the piece stems from the firm, real character of Merton. Fortunately, ASTA has found a fine young actor to play him. Lanny Thomas acts the lad with the conviction that he is worth respecting. By not choosing easy laughs or sight gags, Thomas probes the character's innately honest decency. This young actor was an excellent Romeo last summer on the Monument Grounds, and his wholly different Merton is as well and creatively drawn, words one does not write casually.

In director Russell J. Toscano's supporting cast only P. Gail Duncan is in the Thomas league. She plays "The Montague Girl" with comfortable assurance, ad their scenes together are affecting. Farnest they may be, the rest of the case is on a strictly amateur, untrained level. In its more impressive home. ASTA will need more impressive supporting players. Performances are Wednesday through Sunday evenings at 8. Details at 543-7676.