The CEO of Eleven Media Group, Than Htut Aung, was freed after suffering a heart attack in Yangon's notorious Insein prison, where he had been detained for almost two months.
He and the chief editor of one the group's papers, Wai Phyo, were jailed in November over a column that accused a government minister of receiving a USD 100,000 watch from a businessman who later won plum contracts.
The minister, Phyo Min Thein, is a high-profile member of Aung San Suu Kyi's National League for Democracy, which came to power in March after winning elections that ended decades of military rule.
"The two defendants got bail today because the doctor who checked the CEO's health problems... Reported to the court," their lawyer, Kyee Myint, told AFP.
The pair, whose bail requests were rejected three times before today, will next appear in court on January 13.
Media freedom has increased since Myanmar ended censorship in 2012, the year after a reformist quasi-civilian government took power from the former junta.
But activists say defamation prosecutions have risen sharply since Suu Kyi's NLD party took office.
"I do not see any progress on media freedoms under the new government," Ma Thida, dissident author and founder of the Myanmar chapter of writers advocacy group PEN, told AFP.
"Stopping people from sharing what they think and saying what they see is not the democratic way."
In another defamation case being tried in Yangon today, an NLD official was denied bail after being charged with insulting the head of the army.
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